Invoice finance
Invoice factoring vs invoice discounting, which is right for you?
They're similar, but the differences matter: who chases payment, and whether your customers know a lender is involved.
Tom Young
Co-Founder & Director
• 3 min read
When exploring invoice finance you'll come across two terms: invoice factoring and invoice discounting. They're similar, but there are key differences.
Invoice factoring
The lender manages your sales ledger and collects directly from your customers, who are informed of the arrangement. It suits companies without a dedicated credit control resource, you're buying a service as well as funding.
Invoice discounting
You keep control of collections and the arrangement stays confidential. Customers deal with you as normal. Lenders will want to see that your credit control processes already work before they'll offer it.
Choosing between them
It comes down to one question: do you want collections handled for you, or do you want to keep control and confidentiality? If you have the credit control function, discounting is usually the answer. If chasing payment is a drain you'd rather hand over, factoring is.
For an independent, no-obligation review of your options, call 0330 0438 011.
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