Invoice Factoring Also known as: Invoice Discounting, Selected Invoice Factoring, Invoice Financing, Accounts Receivable Bridging, Invoice Finance, Debt Factoring, Invoice Discounting Finance, Bridging Finance.


Invoice Factoring

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What is factoring:

Invoice factoring is essentially an advance on money / cash due to a business, by means of the "sale of the invoices" to a bridging company. This is not a loan against invoices but an outright sale of  selected invoices ( one or many ) or the full debtors book, to a bridging finance company, but with recourse to the seller of the full invoice value.

Why use single invoice factoring or selective invoice discounting

This is a very simple and reasonably quick method (within 2 weeks of receipt of all documents) used by businesses to improve cash flow or working capital as and when needed. There is no lock in period and no penalty for early settlement. You elect to bridge one or a few invoices not the entire debtors book.


Costs Once

Once off set up fee of approx 3 % to 5 % depending on the size of the invoice bridging required. Monthly cost of between 4,5 % and 6 %
Pre-Conditions to Discount Invoices:
The goods /services must have been delivered / rendered and the customer must have accepted the goods / services with no pending disputes. The company requesting the bridging should be profitable and have a clean credit record.


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A typical scenario:
ABC factory has made shoes and has delivered them to its customer, the retail shoe shop. ABC has granted the retail shop 90 days credit but ABC factory needs its money now.  Invoice bridging / Invoice Factoring / Invoice Discounting is when the bridging company advances up to 80 % of this money to ABC factory and then collects the money from the retail shop in 90 days time. The fee for the period the money was lent out, is deducted from the 20 % still due to ABC factory and the difference is paid to ABC factory.

FAQ
Invoice Factoring
Invoice Discounting
Trade Finance
Debtors Discounting
Reverse Invoice Discounting