What is factoring & confidential invoice discounting?
In a nutshell, confidential invoice discounting and factoring facilities are flexible funding options fluctuating in line with your debtor book.
Such a facility effectively removes the burden of high debtor days (the time taken to collect cash from customers) from your business by advancing a proportion of your invoices on day one.
How does factoring differ from invoice discounting?
In a factoring arrangement, the provider of finance will take control of your sales ledger and actively manage the collection of debt and issue statements direct to your customers who will be asked to pay into a separate bank account in the name of the funder.
In an invoice discounting facility, you retain control of the sales ledger and credit chasing function meaning that your customers should not be aware of the agreement (unlike with factoring). Clearly a factoring arrangement is more expensive due to the administrative burden of the provider of finance.
What are the benefits?
Factoring removes the work associated with chasing in unpaid debts
Confidential invoice discounting means your customers are unaware of any third party involvement
The amount of funding available to you grows alongside your sales
Eliminates waiting 30, 60 or even 90 days to get paid for your work
You don’t need any other assets beyond the value of your invoices
WHAT THEY SAY
Working with Sedulo has opened up many opportunities with regards to access to funding, to the point that I don’t believe we have utilised their services at a cost to us on balance. One of the most cost effective funding we have realised has been the Invoice Discount Factoring where their knowledge and history of deals has helped us achieve the best deal rather than if we had negotiated a deal on our own. I would definitely recommend using their services before signing up with anyone, even on renewal of contract as they have demonstrated with us.
Mark Gray – Charlesworth Press
For more information on factoring and confidential invoicing, download our free guide