Invoice financing is a form of asset based finance and there are several different products available in the market.
- confidential invoice discounting; or
- invoice factoring.
Depending on the product you have selected, the funds available may be based on the total value of your ledger (whole turnover), or in relation to specific invoices or certain customers (single invoice financing/selective invoice financing).
Confidential invoice discounting
The bank or invoice finance provider will purchase your invoices and when the customer pays the invoice, they pay this to a trust account in the name of your business but in the control of the financier. The customer isn’t told about your relationship with the financier. In this way, the arrangement is “confidential.”
However, the financier tell customers at any time that their invoice is subject to invoice finance or discounting.
Invoice factoring is just like confidential invoice discounting, but the financier takes over the credit control function and collects the debts on your behalf. Your customers know they are paying the invoice finance provider when they pay your invoice. The advantages of factoring include the effective outsourcing of your credit control.
When providing invoice finance, a financier will usually take a debenture over the company’s assets as security for the money advanced. It is important to understand that although you may still be liaising with your customer about an invoice, when you enter into an invoice discounting facility or factoring agreement you are giving up your rights to the debt evidenced by that invoice.
At Francis Wilks & Jones we are the experts in invoice finance. We have a team who deal specifically with SME invoice finance and are able to assist you at any time during your invoice finance facility. Contact us now for your expert assistance.
Francis Wilks & Jones is the country’s leading firm of invoice finance solicitors. We are experts in all matters relating to invoice finance. We can help a company understand the finance arrangement and documentation before committing to a provider. Our knowledge of invoice finance is second to none and our advice excellent. Whatever your invoice finance needs, we can assist. Call now to speak to a friendly invoice finance expert.