More and more companies are opting for invoice discounting when they need to unlock money tied up in unpaid invoices quickly. So, what is invoice discounting exactly? Invoice discounting involves borrowing money against unpaid invoices in order to generate capital quickly. If you have a positive relationship with your client, you don’t want them to know you’ve been working with in an invoice finance company, you expect to sell products and services to them again in the future and the invoice isn’t overdue, you simply need to access the money early, invoice discounting could be for you.
Could Factoring Be Better?
The alternative to invoice discounting is invoice factoring. With invoice factoring, a company sells their unpaid invoice to a finance company who then takes over the responsibility of chasing up the money. Factoring may be right for you if you don’t expect to trade with the client again, you have tried and failed to get paid many times, you don’t have the time or resources to continue chasing up payment or you don’t mind the client finding out you’ve used an outside company. It’s wise to spend time thinking about your relationship with the client and your current circumstances before you come to a decision.
Make the choice that’s Right for you
Invoice financing can give you the cash flow boost you require, help you settle your own debts and enable you to take advantage of any investment opportunities you’ve been given that simply cannot wait around. There are many reputable invoice finance companies on the market that can deliver the flexibility and financial support you are looking for. It may be wise to spend time talking to a number of different companies so you can weigh up your options and reach an informed decision.