15/07/2023
Invoice factoring is essentially selling your outstanding invoices for one lump sum. A factoring company will buy your overdue invoices for around 80 to 90 percent of what they’re worth and take over all collection efforts.
Because the factoring company deals directly with your customers to receive payment, you can continue doing business as usual.
Invoice discounting is like taking out a loan against your outstanding invoices. A discounting company will loan you the full amount of your outstanding invoices, and you pay them back as you receive payment.
While you do receive the full value of your overdue invoices (unlike invoice factoring), you will have to pay interest on the loan. You’ll also still have to manage collections efforts so that you can repay the discounting company.
Choose the one that is best and convenient for you and start sending in your invoices.