If you are the owner of a small or medium-sized business, you probably have done a fair amount of worrying about cash flow issues from time to time. While we have spoken about how invoice factoring could potentially be the answer for you, you might also want to consider invoice discounting depending on your specific situation. Whether you have thought about using discounting in the past, or it is a brand new concept to you, continue reading below to learn more about this potential option.
It’s Not The Same As Invoice Factoring
There tends to be a fairly common misconception that invoice discounting and invoice factoring are the exact same thing. We’re here to tell you that it is not. While both of these financial options have things in common, there are also distinct differences. These range from who is in charge of the sales ledger, who collects the money, and how informed your customers are about the services you are using but we will get into that below.
Your Business Will Still Be Looking After Your Sales Ledger
As you probably are familiar from reading our past blog posts, when you hire a factoring company for invoice factoring, they take control of your sales ledger. This is not the case with invoice discounting. With discounting, your business will retain the control over its sales ledger, leaving you to chase payments in the typical way.
Your Customers Won’t Know You Are Using Invoice Discounting
You may remember as well that with factoring, your customers can easily become aware that you are paying for these services. However, with discounting, since you are handling your own ledger, your customers won’t have the slightest clue that you are using these services as you will still be their main point of contact.
It’s Quicker Than Bank Finance
If you have recently launched a startup, you probably are familiar with what a nightmare it is to try and access traditional bank finance. It can be an arduous process during which the waiting feels as though it will never quite come to an end. Not to mention, all of that patience and paperwork does not guarantee that you will get the financing that you need. On the other hand, just like invoice factoring, invoice discounting is much more accessible for small and medium-sized businesses. Having this faster access to finance can often make all the difference when it comes to whether a business survives or fails.
It’s A Source Of Finance That Grows With You
One of the best aspects of invoice discounting is that as the value of your outstanding debtors increases, you will be able to obtain more cash through the discounting process. Yes, we are telling you that not only will discounting help to alleviate the cash flow issues you are dealing with in the short term, but it will help help to soar your business upwards in the future as well.
Not Interested? Try Hiring An Invoice Factoring Company
If you have learned about invoice factoring in the past and that is still something you would like to pursue, we can’t argue with you. After all, The Commercial Finance Group specializes as a factoring company. Contact us today to learn more about how we help you!
