I’ve recently discussed the similarities and differences between invoice discounting and invoice factoring and how they’re useful forms of small business funding. In that blog post, I illustrated how invoice discounting works in a generic sense. There are, however, four main variations on this type of invoice financing, so today’s post goes into each type in a little more detail.
Disclosed invoice discounting facility
When you use a disclosed invoice discounting facility, all parties, including the customer or client, are made aware of the arrangement and the client settles their invoice with your financier rather than with you. The advantage of this form of invoice discounting is that you can leverage your customer’s credit standing to achieve a low financing fee.
Confidential invoice discounting facility
As opposed to the disclosed variety, the confidential version of invoice discounting, also called undisclosed invoice finance, is conducted entirely without your customer’s knowledge. Your customer settles your invoices in a controlled account where financier has access to.. Undisclosed invoice finance attracts a higher fee than disclosed invoice discounting but it enables you to maintain or build a strong relationship with your customer.
Spot invoice discounting
Spot invoice discounting is the practice of selling individual invoices on an as needs basis. This small business funding option provides maximum flexibility and is probably most suitable for you if your business has fluctuate funding needs. For example project-based work and seasonal goods.
Whole turnover invoice discounting
As opposed to the spot variation, whole turnover invoice discounting is the practice of selling an entire sales ledger. This is probably most suitable for you if your business operates through long-term contracts, perhaps providing long-term services or distributing products wholesale.
Invoice discounting at InvoiceInterchange
Here at InvoiceInterchange, we offer quick, easy, and flexible invoice financing solutions, providing small business funding to overcome cash flow challenges. You can choose any or all of the above four varieties of invoice discounting to obtain funds in under 24 hours. Helping to improve your business’s cash flow is our priority and so we offer personalised customer support to ensure the unique needs of your business are met. You can be confident you’ll get great value from us as we don’t force you into a locked-in contract and our fees are fully transparent. So, to start solving your business’s cash flow challenges, get in touch with InvoiceInterchange today.