Invoice Discounting vs Factoring

Invoice Discounting vs Factoring

Invoice discounting and factoring are a very similar product, the key difference between them is who collects the payments from the debtors. With invoice discounting the company that does business with the customer i.e. you will collect payment and your customer will never know that you are using this service. With invoice factoring you pass over the responsibility of collecting payment to the company that provides you with the invoice factoring service.
What is best for you will depend on your individual circumstances and there are several factors to consider such as:

  • Would you rather concentrate on growing your business than chasing payment from your clients – then go for invoice factoring.
  • Do you want to fully control the relationship with your customer including collecting payment – then go for invoice discounting.
  • There is an extra cost to outsourcing payment collection which you may not want to pay – then go for invoice discounting.

If you would like to discuss invoice discounting and factoring solutions or anything else please contact us.