Invoice Discounting
What Is Invoice Discounting?
Invoice discounting is a short-term borrowing method where a business uses its accounts receivable (outstanding invoices) as collateral to get immediate cash from a financial institution or lender. The lender advances a significant percentage of the invoice value – typically 80% to 95% – and the balance (minus fees) is released once the customer pays.
Unlike invoice factoring, invoice discounting keeps the credit control and customer relationship management with the business, ensuring confidentiality and control.
How Does Invoice Discounting Work?
Raise an Invoice
You issue an invoice to your customer for goods or services delivered.
Repay the Lender
You repay the lender with interest/fees and receive any remaining funds.
Receive Advance
The lender immediately releases a percentage of the invoice value (usually within 24–48 hours).
Customer Payment
Your customer pays the invoice directly to your business.
Benefits of Invoice Discounting
Improved Cash Flow
Unlock funds from unpaid invoices to meet payroll, pay suppliers, or seize business opportunities — without waiting 30, 60, or 90 days for payment.
Maintain Customer Relationships
Since invoice discounting is confidential, your clients remain unaware of any third-party involvement in your receivables.
Flexible and Scalable
The more you sell and invoice, the more funds you can access — making it ideal for fast-growing businesses.
Retain Control
You continue to manage collections and customer interactions, keeping your credit control and customer trust intact.
Quick Turnaround
Funds are typically disbursed within 24–48 hours of invoice submission, helping you respond swiftly to cash flow needs.