- 14 Aug
Receivables discounting, sometimes called accounts receivable discounting (or A/R Discounting), is a business financing facility whereby the debts that your customers own you are sold to funder at less than the full face value i.e. at a discount.
Receivables means the monies that you are owed by customers. These can be invoices for goods or services that you have supplied, or in the case of the construction sector, it can mean applications for payment (a methodology of requesting payments in stages used by c. 75% of construction sector companies).
Discounting means purchasing such a debt at less than its face value. Even if a funder offers 100% prepayments, they will usually deduct their fee from the value of funding that they pay you.
The term "receivables" is more commonly used in countries such as USA, and is more usually referred to as invoice finance, factoring or invoice discounting, in the UK, and their are many different types of invoice funding. However, technically A/R discounting is a better umbrella term because the lack of the word "invoice" means it encompasses sectors like construction that don't raise an invoice as such i.e. both invoices and applications for payment can be considered receivables.
Discounting tends to suggest purely funding being provided, as opposed to funding and credit control - which is commonly called factoring. So accounts receivables finance is probably the best overall umbrella term for these services, as it can cover all the previously mentioned forms of funding even including selective and spot funding facilites (both refer to arrangements whereby you pick and choose transactions to be funded, rather than submitting them all).
Finding Receivables Discounting
I have written previously about how hit and miss it can be, using the internet to try and find these kinds of services. What search engines show you is often highly influenced by either paid advertising or investment in search engine optimisation campaigns - rather than just the best provider to help you find what you need.
A quick search online revealed the normal variety of paid advertisers, factoring companies, finance brokers and definition sites competing for the top of the first page in the search engines. As with any search, you will take your chances as to which of these options you select.
Free Advice & Support
If you need some free, independent advice and support about the subject, please speak to Sean on 03330 113622. You can see details of who FundInvoice are and some of the glowing testimonials we have received from our clients, on this site. At the time of writing we have:
- Received an average customer satisfaction rating of 4.9* out of 5.
- Been able to find business finance for 97% of companies.
- Found average savings of 31%* on invoice finance prices quotes elsewhere.
Note: * Updated October 2019.
- 11 Apr
Reverse factoring (sometimes called Supply Chain Finance) is a financial facility that a large company can arrange with a financier, providing a factoring service to some or all of their suppliers. It turns the whole factoring model upside down. Instead of individual suppliers having their own facilities, the substantial debtor puts in place an umbrella arrangement that benefits all (or some) of...
- 29 Jan
Credit To Pay For Raw Materials
Persuading suppliers to provide you with a sufficiently large enough trade credit to allow you to source all the raw materials that you need can be difficult. We have come across situations where manufacturers end up having to phone around suppliers in order to purchase the supplies that they need. This is why many manufacturing companies turn to invoice funding as a solution.If you are unable...
- 11 Jan
Sales Ledger Finance Versus Factoring
Sales ledger finance and factoring are two types of receivables finance (also sometimes called invoice finance), whereby the core service provided is that a prepayment is given against outstanding accounts receivable, that are owed to a business.Whilst this funding is nearly always part of a factoring service, there are some "service only" facilities that provide only the credit control without...
- 09 Jan
Alternatives To Funding Your Business With Your Own Personal Funds
When you run your own business you often end up putting in your own money, using your personal funds to keep the business going. It's the easiest of the sources of business funding, as you don't have to apply (if you already have the money) and business owners often have a "self sufficient" attitude that they don't want to turn to external sources of finance.The dangers of using your personal...
- 11 Dec
Business Cash In Time For Christmas
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- 18 Aug
Who Can Use Invoice Finance?
This is a reminder of who can meet the acceptance criteria to use invoice finance. There is a form of receivables funding to suit just about every type of business.Pretty much any industry sector has a form of receivables finance available. There are certain sectors that commonly use these products, the latest UK Finance (the industry body for receivables finance) statistics to the end of Q1 2018...
- 19 Jul
Invoice Finance Despite Sale Or Return Terms
Normally finding invoice finance when a large customer trades on "sale or return" terms (SOR) would be impossible. However, we have just completed such a deal for one of our clients.Sale or return means that the customer receives your product and they can return it if they are unable to sell it. If they can sell it they pay for it. Invoices are often raise before the outcome of their sales...
- 29 Jun
Examples Of Invoice Finance Funding Lines We Have Arranged
Looking back over the invoice finance funding lines that we have arranged for clients over the last few months, the size of the funding lines put in place ranges quite dramatically.The invoice finance funding lines we have facilitated ranged from just £8K up to £1m, and all points in between. Quite a few have been around the £150K to £200K mark and there have been a few larger lines e.g....
- 21 May
Accounts Receivable Funding
The frustration of looking at a large sales ledger of unpaid invoices for sales, whilst having an empty bank account, can be debilitating. Not to mention the problems it causes in paying your creditors, suppliers and staff.When you first make a large sale, the feeling is exhilaration at having closed a deal. However, there can often be significant delays between making a sale, delivering the...
- 20 Apr
Transportation Factoring Companies
Transportation and distribution are key sectors for the use of factoring services. Many companies within those sectors use this form of funding, in order to unlock cash to improve their cash flow.Transport companies accounted for 6.6% of all clients of members of the ABFA (now UK Finance) as at the end of December 2017. Distribution companies accounted for 23.5% of client numbers, at the same...
- 05 Apr
5 Things To Check When Completing Your VAT Return
As it is coming to the end of the VAT quarter again, I thought I would make a list of the five things that I check regarding each VAT return. The list is not intended to be comprehensive, and we are not providing any accounting advice, rather this is a list of the items that I check.If like us your accountant produces your VAT return, you will still need to check that the figures are...
- 01 Apr
Leveraging Target Company Assets To Raise Money For An Acquisition
We have continued to work with a number of parties who are looking to make acquisitions by leveraging the assets of the target company that they are acquiring. This is a way to raise part or all of the purchase price to pay for the business that is being acquired.This methodology of raising acquisition finance is not widely known, but it can be an excellent way of facilitating the acquisition of...
- 28 Mar
Funding For A Car Crash Repairer Within 3 Days
This is a great example of how quickly a car crash repair company can get funding against their invoices.We were contacted at 4:30pm by a car crash repair company that had an invoice for £4,000 that they wanted to receive funding against. The way that this type of car repairer finance works is that they receive 100% of that invoice value, less a fee for the transaction.The actual enquiry was...