Invoice discounting meaning
Invoice discounting is a type of invoice finance. It differs from other types of invoice finance such as factoring in that it is the term commonly used where the facility is confidential. By this, what that means is the end customer is unaware of the invoice discounting or finance facility in place between the bank/financier and the business using that facility. The end customer has no notice of assignment of the invoices or debts between the company and the bank/financier and makes payments into a bank account in the usual way. However, that bank account is in fact a trust account controlled by the finance company/bank.
Invoice discounting is a very popular form of finance used by some of the biggest companies in the country. It provides excellent cashflow advantages for business whilst at the same time, the company itself maintains the credit control function within its own business and chases its own debts. It is suited for certain types of businesses and obviously those which have their own credit control function.
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