Factoring v Invoice Discounting
Invoice Finance comes in two main forms, Factoring & Invoice Discounting. The key difference between the two products is who is in charge of chasing & collecting payments in from customers.
Factoring facilities come with credit control included, meaning the lender is responsible for chasing & collecting in payments from customers. With credit control included, businesses do not have to worry about chasing in payments, saving them time & money in the process.
Factoring is therefore more suited to smaller, growing businesses who need more time to focus on growth.
Invoice Discounting is a funding-only without credit control included, meaning the company is responsible for chasing & collecting in payments from customers. You will keep the relationship with your customers, and in most cases they will not know a facility is in place. Your customers will pay into a trust account set up in your name, but controlled by the funder.
Invoice Discounting is more suited to larger companies who already have an established credit control process, and simply need an injection of funding to assist their cash flow.
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