Everything you need to know about invoice
discounting in the UK is shown on this site.
This website is a free resource for
you to use and is provided by Cashflow Acceleration Limited,
who provide a free
quotation search service for invoice discounting UK wide.
If you already know you just want invoice
discounting quotations complete this online quotation search
request and we will
find the best quotations we can for your business:
FREE ONLINE QUOTATION SEARCH REQUEST
If you need help regarding invoice
discounting or quotations and prices just contact us and we will be able
to help
you. We are an independent, specialists within the UK. Our service
is free of charge to you to use (we only receive a
commission from the discounter if you go ahead) and
we can help you find the right invoice
discounters for your business.
We have access to the latest offers and discounts so we can normally save our clients money on quotations they receive
elsewhere.
We are members
of the National Association of Commercial
Finance Brokers.
Call us on: 01892 784183 or
Email:
support@invoice-discounting.com
It is a method of raising
working capital i.e. cash, for a business against its outstanding
sales invoices
also known as your accounts receivable (they must be credit invoices e.g. 30
days credit).
The company that provides the finance is know as the "
invoice discounter".
More details about invoice discounting.
Your invoices are passed to the discounter
(either by post or in some cases uploaded electronically over a
secure internet
link) and the discounter will provide you with a cash payment of up to 95% of
the value of the
invoices for you to use in your business for whatever purpose
you choose (don't worry the rest of the invoice
value is passed onto you when
the customers pay). When the invoices are paid by your customers (also
known as debtors) you bank the payments into a special bank account (known as
the trust account) which
is in your name but the discounter has control over and
hence these receipts repay the initial payment that
was provided and you receive
the balance of the invoice value. As you raise more credit invoices so the
discounter provides further early payments (also known as initial payments).
Therefore, if you discount a sales ledger
made up of accounts receivable totalling say £200,000 and you
received an 85%
initial payment you could raise up to £170,000 in cash to be used in your
business (remember
the balance is passed to you when the debtors pay). The
discounter will charge you a fee for using the service
(the fees are explained
below in the section What It Costs.
Invoice discounting can be Confidential so
that no-one will know that you are using a facility and you can continue
to
collect your own invoices and your customer relationships remain unaffected. Even if they pay directly into the
trust account it will appear to be your
businesses bank account.
You can also add bad debt protection onto
your invoice discounting facility if you wish which can give you
up to 100%
protection against bad debts in the event of your debtors failing.
The charges for using invoice discounting
can be broken down into three component parts, you need to be
very careful when
comparing quotations because different discounters will structure their fees in
different ways.
We can help you assess the quotations that you receive if
required. The three component parts are:
Administration Charge - a percentage of your sales turnover, normally between: 0.2% and 3.5%.
Discount Charge - a percentage
charge, over bank base rate, levied against the amount of funding that
you
receive. It works in a similar way to interest on an overdraft or loan
although technically it is not interest.
Typically you would be charged
between: 1.0% and 3.5% over bank base rate.
Other Charges - there may be other
charges that the discounter levies for example for same day
payments (CHAPS) or
for other disbursements. Your discounter should be able to provide you
with a list of
these charges.
Once again, we can help you compare
quotations and we can normally beat any quotation that you have
received
elsewhere.
Carefully is the answer! Different
discounters will structure their quotations differently and to make sure
you are
not mislead it is worth speaking to industry specialists. Broadly speaking
our top tips for comparing
prices are as follows:
Speak to independent experts like ourselves (well we had to say it didn't we!)
Calculate the likely overall
cost (make assumptions about the funding you will draw and your
projected
sales) rather than just looking at the Administration Charge
Ask for a breakdown of all the possible other charges and calculate the impact they could make
Make sure that the level of funding is
going to be equal (are you comparing apples with apples?)
take into
consideration any restrictions such as against prime debtors
Consider the impact of any termination
charges you might have to pay to leave any existing
arrangements
Read the discounting agreement and any
offer letters carefully and consult your legal advisers if you are
unsure
It is common for businesses to move between
Invoice Discounters and any that are members of the ABFA
(the body that governs
the industry) will subscribe to a standard set of transfer procedures. Be
careful if
they are not members and ask for details of the procedures that will
be followed this is one of the
pitfalls that you need to avoid. Another is committing to extended contracts of
2 or 3 years which
limits your flexibility to change discounters in the future.
You should check to see if you will be
charged termination fees to leave any existing arrangements but in
some cases
the incoming discounter will be happy to help you pay those fees in part or in
full.
Several, but not all discounters offer "hand holding"
services to help you transfer with the minimum
of disruption. Ask your provider if they offer such a service.
Even if your credit rating is poor you may
still be able to access funding through invoice discounting.
There are
other invoice financing alternatives that are available even if invoice
discounting will not suit
your business.
There are alternatives, Invoice Discounting is just one product
within the group of products known as invoice finance.
Factoring is
another alternative for businesses that also require help collecting their
accounts receivable.
If you have any other questions about invoice discounting just email us: support@invoice-discounting.com
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Licenced by the Office of Fair Trading - Consumer Credit Licence Number 542656.
Members of the National Association of Finance Brokers and Specialists in Invoice Discounting