What are the requirements for invoice discounting?

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Invoice discounting is a means of unlocking working capital tied up in invoices by selling them to a factor. With an invoice discounting agreement the business remains fully in charge of customer communication, sales ledger and debt collection, which allows greater control and confidentiality as well as providing a higher return. However,  invoice discounting requirements are more stringent than for an invoice factoring agreement . Usual criteria are an annual turnover of at least &pound;500,000 (and sometimes &pound;1 million), a minimum net worth of &pound;30,000 and a proven history of profitability. You must also have well established resources and procedures in place to manage all financial administration, a reasonable spread of customers and be subject to regular auditing by your invoice discounting provider.

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