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Invoice Discounting

invoice discounting

Invoice Discounting is a great way for businesses to get a short-term financing solution. Businesses that offer their customers invoices with 30 to 60 days to make payment are eligible for this type of business financing. Invoice discounting gives the business owner a percentage of the customers invoice total immediately, rather than waiting the full 30 to 60 days to receive payment. This frees up working capital for the business owner to meet their financial needs, whatever they may be at that time. This type of business financing is also very cost effective with low rates.

What is Invoice Discounting?

Invoice Discounting allows business owners to borrow money against a customers invoice before it is paid, the invoice is used as a form of collateral. The financing company does not give the full invoice total to the business owner, only a percentage, after the customer pays the invoice the financing company receives the money borrowed with interest and the business owner receives the difference.  This is not a traditional business loan, the business owners credit rating is not a factoring in invoice discounting, only the accounts receivables invoices are. This makes it a great option for business owners with less than perfect credit. As well as keeping lines of credit open just in case the business needs to use other financing options.

Common benefits to invoice discounting

  • Not a loan
  • Business credit is not a factor
  • Invoice is used as collateral
  • Business own can receive a percentage of the invoice, typically 70% to 85%
  • Low rates and fees; on average the rates are 1% to 4% for the first 30 days, then 1% every 10 days there after
  • Processes within 3 days, some times sooner
  • Frees up cash flow for the business

Terms and Conditions

The terms and conditions of invoice discounting are similar to all companies. Invoice Discounting companies offer 70% to 85% of the invoice total to business owners, holding the invoice as collateral. Business owner agrees to pay fees and rates on the invoice total, on average 1% to 4% for the first 30 days and then 1% every 10 days after. Business owners must give the invoice discounting company 3 months notices to discontinuing their services to avoid any unwanted fees.

How to use Invoice Discounting
  • Find a business financing company that offers Invoice Discounting
  • Make sure your business meets the financing companies requirements
  • Submit your businesses information as well as customer invoices
  • Negotiate the terms and conditions of the contract
  • Sign the contract and submit your business bank account information

Invoice discounting is a great short-term option for business financing. It does not effect the business owners credit nor is it determined by it, making it a perfect financing option for businesses with less than perfect credit ratings. Invoice discounting gets businesses the money the need fast and at a good rate, making it a cost effective financing option. While this is not an option for all businesses in need of short-term financing, it is a great one to those who are eligible.

When You Are Ready, We Are Here

Factoring.net is ready when you are. If you’re running low on working capital or just need some extra funds, Factoring is a great way to leverage your already existing assets – your receivables. Fill out the short application now or give us a call.

  • Factoring is not a Loan, it's a sale of YOUR receivables!
  • Our rates are the lowest in the industry, starting at 1.5 %.
  • We offer a non-recourse factgoring. Sleep soundly at night!
  • We fund approved deals within 48 hours.
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Everyone was very helpful to our company throughout the process. We really needed to get cash for invoices immediately, and Kris along with the rest of his team delivered.

- Kristin Wintum Charles Town, WV testimonial
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