January 25, 2015 Liquid Assets

Invoice discounting

Invoice discounting is a form of short-term borrowing often used to improve a company’s working capital and cash flow position.

Invoice discounting allows a business to draw money against its sales invoices before the customer has actually paid. To do this, the business borrows a percentage of the value of its sales ledger from a finance company, effectively using the unpaid sales invoices as collateral for the borrowing.

Invoice Discounting is sometimes referred to as Discreet Factoring as it is essentially the same product as Factoring – the business gets cash from its sales invoices earlier than it otherwise would – but the key difference is that the credit control remains with the business owner.

Benefits of Invoice Discounting:

  • By receiving cash as soon as a sales invoice is raised, the business will find that its cash flow and working capital position is improved.
  • Invoice discounting can be arranged confidentially, so customers won’t know that a company is borrowing against invoices.
  • The company maintains closer relationships with its customers, because the company is still managing client accounts.

Benefits of Liquid Assets:

  • Transparent funding so businesses understand every step of the process.
  • Quick decision making processes so companies can quickly understand the state of their cash flow.
  • Market leading returns for investors with very short minimum investment terms.
  • Investment security from asset backed lending and strict criteria for borrowers.

 

From: Wikipedia

Invoice Discounting by Liquid Assets