Both factoring and invoice discounting pay an important role within financial services, and we believe it is important that you understand the differences. Both services are similar in the way that they improve cash flow as well as releasing funds tied up in your unpaid invoices.
Your business will keep control of its own sales ledger and chases payment in the normal way with invoice discounting whereas with factoring the customer will settle the invoice directly with the factoring company, therefore customers will be far more aware of your factoring agreement
There is also another apparent reason why there are both different and this is in the area of confidentiality. With Factoring, the provider takes the role of managing the sales ledger, credit control and chasing customers for settlement of their invoices. With Invoice Discounting, your customers still pay you directly so there is no need for them to know that a third party is involved, meaning that they are unaware of your relationship with the financing company.
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