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Using invoice discounting?

Question asked by Cooper

Can any business use invoice discounting to raise working capital?

response from John Englund

Companies with established credit control systems and annual sales turnover of £250,000 to £500,000 can usually take advantage of invoice discounting to raise cash flow and funds to invest in growth. 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. In an invoice discounting arrangement 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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