Glossary · Invoice finance
Invoice discounting
Also called Confidential invoice discounting
Invoice discounting is borrowing against your unpaid invoices while you keep collecting from customers yourself, usually without them knowing.
With invoice discounting, a lender advances a percentage of your receivables ledger, and you repay as customers pay. You keep control of your sales ledger and your customer relationships; customers pay into an account the lender controls but which is in your name.
Because collection stays with you, lenders want evidence that you can do it well: an established business, a clean ledger and solid credit control. It is typically offered to larger and more established firms than factoring.
The confidentiality is the main attraction. Customers never deal with a finance company, so the financing doesn’t change how they see you.
Example
A company with a €400,000 receivables ledger draws €300,000 under a confidential invoice discounting facility. Its customers keep receiving reminders from the company’s own finance team.