I see a lot of clients who insist from the outset that they want an invoice discounting facility but most of them don’t actually know why.

Invoice discounting is available and importantly it is more readilily available than it used to be. However, factoring is the easier facility to obtain is it represents lower risk to the lender.

So what can invoice discounting offer?

Confidentiality – yes invoice discounting can be confidential but some companies insist on a disclosed facility. Factoring, however, can also be a confidential facility or a disclosed facility.

Control – some companies prefer to keep the credit control in-house rather than outsourcing to a factoring company. So invoice discounting allows a business to maintain control over the credit control function. However, so does a CHOCS facility which is a type of factoring facility.

Cost – many feel that invoice discounting is cheaper. Certainly for larger businesses I would agree. However, at lower levels of turnover there is probably not a lot in it.

Rather than deciding that invoice discounting is what you want I think it is important to consider the structure of your facility, the characteristics you want and then the costs of such a facility.