Invoice discounting is no longer the niche financial product that it once was and with over 43,000 companies using various invoice finance facilities it is now considered to be mainstream finance with the various companies using invoice finance having a combined turnover in excess of £200 billion
The big advantage of invoice discounting is that the availability of funding isn’t fixed as it is with more traditional forms of bank lending but should automatically increase in line with increasing sales so growing companies are safe in the knowledge that the working capital funding will always be there to cope with growth.
Unfortunately unlike overdraft funding which hardly varies between bank to bank there is a great deal of difference between the invoice finance facilities on offer, whether by high street banks or independent providers, although these differences may not immediately apparent
Invoice discounting is not straight forward
Invoice discounting should in theory be straightforward but in practice it isn’t and as we have real concerns with the way that many of the funding companies operate we have documented some of the possible pitfalls including such things as problems with hidden costs that are never adequately explained, contrived excuses for keeping the funding levels as low as possible by imposing commercially unrealistic limits whether they be credit limits, overall funding limits or concentration limits, all designed to keep the funding levels as low as possible.