Choosing Between Factoring & Invoice
Discounting
If your business is already large enough to afford
the staff and information systems to efficiently manage
and collect your outstanding invoices you may want to
consider an invoice discounting rather than factoring
service. It is identical to factoring except that the
sales ledger management - the collection responsibility
- remains with you. The service is undisclosed to the
customer.
Again there are two costs: An administration
charge, either a flat fee or a percentage of
turnover and an interest charge for
the cash advances.
Rule of thumb: if your business
has an annual turnover of more than £1 million
and an own accounting system, you may want to look at
invoice discounting.
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Invoice
Factoring Guide
