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Criteria for invoice discounting?

Question asked by Phillip - Feb 11, 2014

What criteria do my company need to satisfy in order to use invoice discounting?

response from John Englund
- Feb 11, 2014

Invoice discounting is typically available to larger companies with established credit control systems and annual sales turnover above £500,000 (some sources place the lower limit at £250,000). Companies seeking to arrange an invoice discounting facility need to satisfy providers that the client can manage their own sales ledger administration and credit control facilities. Unlike factoring, responsibility for raising sales invoices and for credit control stays with the business, and the finance company may require regular reports on the sales ledger and credit control procedures in place. The finance company charges a monthly fee for the invoice discounting service, plus interest on the amount borrowed against sales invoices. The finance company may also refuse to lend against some invoices, for example if it believes the customer is a credit risk, sales to overseas companies, sales with very long credit terms, or very small value invoices.


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