Invoice Discounting

An Invoice Discounting facility generates funding against the sales ledger in much the same way as factoring. The main difference is that the company retains responsibility for chasing their own ledger.

This type of facility is available to companies that have excellent audit trails, and can demonstrate the ability to collect the debt in-house.

Many companies prefer invoice discounting because it enables them to maintain their existing relationships with their customers, as well as being cheaper in terms of the service charge involved. For those companies who do not wish for their customers to know of a third party involvement, a Confidential Invoice Discounting facility is the best option.

To complement the invoice discounting facility, a number of funders will also look at other assets within the business with a view to providing additional funding against plant and equipment, property and stock. This Asset Based Lending as it is known, can be particularly useful to fund seasonal stocking requirements, or to provide increased leverage in the short term to effect management buy outs.

Invoice Discounting Case Studies

Confidential Invoice Discounting 3

Turnover: £1,000,000

This family run print finishing company needed funding to expand the business. Their bank was unwilling to increase their overdraft facility, and recommended invoice discounting (and their own discounting company) as an alternative. Despite the long standing banking relationship with the client, and the excellent administrative systems in place, the bank-owned factor lacked the flexibility to structure a deal for them. The bank then recommended that they contact Sterling Capital Reserve for assistance. We put them in touch with an independent factoring company, and a facility was quickly arranged to the satisfaction of both parties.

Disclosed Invoice Discounting

Turnover: £1.2m

Based in Leicestershire, this manufacturer of cardboard cartons was established in the late 1980's, providing a high quality product to a blue chip debtor base. More recently, the company has been through a re-organisation in order to reduce costs and streamline operations. Having operated a confidential invoice discounting facility for a number of years, their relationship with the discounting company had not been without its problems.
The discounting company had undergone a couple of changes of ownership, and there had been frequent changes in the members of staff handling their account. The final straw, however, came when the discounting company tried to impose a move to a factoring facility. Unhappy at the prospect of changing to factoring, our client contacted us to find an alternative invoice discounting facility.
They faced a long notice period to terminate their existing facility, but the discounter that we introduced was extremely patient, and helped to make the final transfer between the two companies as smooth as possible.

Confidential Invoice Discounting

Turnover: £1.1 million

Established as a partnership over 10 years ago, this road freight transport company became a limited company only 12 months ago. Looking to improve their cashflow, they were interested in a confidential invoice discounting facility, and had already had meetings with 6 factoring and discounting companies before approaching Sterling Capital Reserve.
Despite having offers on the table, they did not feel comfortable to go ahead with any of the companies they had already dealt with. They wanted a more personal approach, and were looking for a company to work in partnership with them to help them achieve continued growth. They wanted a factoring and discounting company that could offer that little bit more in terms of service. We arranged for them to meet with a well-respected independent company who fitted the bill perfectly. Their representative immediately put the client at ease. Every aspect of the facility was explained in great detail, and all the costs were highlighted (so there would be no hidden extras).
The client was delighted, and a week later they received their first payment from the discounting facility.

Confidential Invoice Discounting 2

Turnover: £800k

This London based business had a couple of tough years of trading, but was forecasting a return to profit, and required an invoice discounting facility. They were particularly interested in the confidential aspect of a facility, however their financial position meant that the majority of discounters turned them down as unsuitable, and could only offer factoring.
Here at Sterling Capital Reserve we deal with independent factoring companies who are flexible in their approach and tailor facilities to meet the needs of individual clients. We put them in touch with a discounting company that took time to understand the business.
The process took a little longer than usual, but the client agrees it was certainly well worth the wait.