Invoice discounting is a type of business loan that uses a business’s unpaid accounts receivable as collateral for a loan. It is called invoice discounting as the amount that the business can borrow is the total accounts receivables less a discounted amount. Typically, after the discount, borrowers can access around 80% of the value of their accounts receivable.
It is designed to give businesses the opportunity to accelerate cash flow from customers so, instead of waiting for invoices to be paid, they can access cash shortly after the invoice is issued. These funds can then be used by the business to invest in the production of more goods and services, or to take advantage of attractive business opportunities.
Invoice discounting and Invoice finance/financing are terms that can be used interchangeably. For both invoice discounting and invoice finance, the client retains control of the ledger and is responsible for chasing up unpaid accounts. Invoice discounting can also range from single invoice discounting, single customer discounting, multi-customer discounting for full-ledger discounting.
Contact Skippr Invoice Finance today to see how we can help your business grow.
There are two key differences between invoice discounting and invoice factoring and these involve who has access to your ledger, and confidentiality.
In invoice discounting, you as a client retain the right to control the ledger. That means you will be solely responsible for ensuring accounts are paid on time.
If you choose to take advantage of an invoice discounting service, your clients will not know you are using a third party to finance your business unless you choose to disclose this information.
Whereas in factoring, the loan company will take on this responsibility and will contact your clients directly.
This could potentially lead to strained relationships, and you will lose a degree of autonomy over your accounts.
While there are advantages and disadvantages to both invoice discounting and invoice factoring, at the end of the day the circumstances of your finances and the business environment you operate in will determine what type of loan you choose.
Most businesses will choose the invoice discounting or invoice financing option largely because of the fact you retain control of the ledger.
If, however, you are a small start-up without a dedicated human resources/accounting team or the resources to chase up invoices, invoice factoring might be more suited to your needs.
Applying for invoice discounting with Skippr is a quick and easy online process that won’t take weeks for approval.
To qualify for a business loan from Skippr Invoice Finance, your business needs to demonstrate the following:
The first step is to create an account with Skippr Invoice Finance at skippr.com.au and connect your accounting software.
In less than 24 hours we will be back in touch with either an offer or some additional questions.
Once you accept the offer, we can often provide your invoice finance funding within 24 hours. No stress, no hassle, no banks. Just the Skippr personal touch..
If you have any concerns or questions throughout the process, please don’t hesitate to get in touch with a friendly member of our team.