Invoice Discounting Broker

Release cash from your invoices while you stay in control of collections

/ FCA Registered

Reference: 729876

Fund your business without your customers knowing

Invoice discounting advances you most of the value of an invoice soon after you raise it, so you are not left waiting weeks or months to be paid. Unlike factoring, you carry on collecting payment yourself and your customers deal with you as they always have, because the facility is confidential.

Mill Wood Finance supports UK businesses by helping you find the right discounting facility, comparing lenders across a panel rather than simply pointing you at a single provider.

What is invoice discounting?

Invoice discounting is a form of invoice finance that lets you borrow against the money tied up in your unpaid invoices. A lender advances you most of the value of your sales ledger, and you draw on that funding while continuing to run your own credit control. When your customer pays, usually into a bank account in your own name, the advance is settled and you keep the balance, minus the lender’s fee.

The defining feature is that it is confidential and stays in-house. Your customers are not told a facility is in place, and you carry on invoicing and chasing payment exactly as before. That makes invoice discounting well suited to established businesses that run their own credit control and want substantial funding without a lender stepping into their customer relationships.

As the funding is drawn against your whole ledger, it tends to release more than factoring, which suits companies invoicing at higher volumes.

Invoice discounting vs debt factoring

Debt factoring (invoice factoring) and invoice discounting both release cash from unpaid invoices. The difference is who collects payment and whether your customers know.

Invoice discounting

With invoice discounting, you keep collections in-house and the arrangement stays confidential. Discounting suits established businesses that have that function already and would rather keep their customer relationships to themselves.

Debt factoring

With invoice factoring, also called debt factoring, the lender takes over your credit control and collects payment from your customers directly, so they know the facility is in place. Factoring suits businesses that want to hand over the chasing, often smaller ones without a credit control team.

Benefits of invoice discounting

The main draw is releasing cash without changing anything your customers see. Alongside that, discounting offers:

Confidentiality, so your customers are not aware you are using finance and nothing changes in how you deal with them
Control, because you keep your own credit control and customer relationships rather than handing them to a lender
Lower fees than factoring in most cases, because the lender is not running your credit control for you

Comparing invoice discounting lenders

Lenders differ in the businesses they will fund, the entry requirements they set and the fees they charge. The first provider you approach is rarely the best fit, and their entry criteria may rule you out when another lender would say yes.

Mill Wood Finance compare invoice discounting facilities across a panel of lenders on your behalf. We match your business to the lenders suited to your size and sector, and handle the process through to the facility being in place. Where you already have a facility, we can benchmark your terms against the market to see whether they still stand up, and for larger businesses a fraction of a percent on the fee is worth having looked at.

Due to the fact we work across a panel rather than for one lender, the facility we recommend is the one that fits your business, not the one product a single provider happens to sell.

Invoice discounting for smaller businesses

Invoice discounting was traditionally reserved for larger companies, because a lender is trusting you to run collections properly and needs confidence in your systems. Minimum turnovers of a million pounds or more were common, which put it out of reach for many smaller businesses.

A number of lenders now offer discounting to smaller businesses with sound accounting systems and reliable credit control, rather than judging eligibility on size alone. If your systems are solid, it is worth knowing the option may be open to you even if you have previously been told your business was too small.

You may be a good fit for invoice factoring if...

You are an established business selling to other businesses on credit terms and waiting weeks or months to be paid
You have your own credit control function and want to keep collecting payment yourself
You would rather your customers did not know you are using finance
You invoice at volumes where the funding released, and the fee you pay, are worth getting right

FAQs

What is invoice discounting finance?

Invoice discounting finance releases cash from your unpaid invoices by advancing most of their value soon after you raise them. You continue collecting payment from your customers yourself, and once they pay, the advance is settled and you keep the balance minus the lender’s fee. It is a confidential form of invoice finance in which you keep control of your own credit control.

What is the difference between debt factoring and invoice discounting?

With debt factoring, the lender collects payment from your customers and they know the facility is in place. With invoice discounting, you keep collecting payment yourself and the arrangement stays confidential. The choice comes down to whether you want to keep credit control and your customer relationships in-house.

Is invoice discounting suitable for small businesses?

Increasingly, yes. It was once reserved for larger companies, but a number of lenders now offer discounting to smaller businesses with sound accounting systems and reliable credit control. Entry requirements vary, so it is worth checking which lenders will consider a business of your size, which is something we help with.

Will my customers know I am using invoice discounting?

No. Invoice discounting is confidential, so your customers are not told a facility is in place. You carry on invoicing and collecting payment as normal, and payment usually runs through a bank account in your own name.

What does invoice discounting cost?

Charges are usually made up of a service fee for running the facility and a discount fee on the funds you draw, which works in a similar way to interest. What you pay depends on your turnover, sector and how you invoice, and we set out the likely cost clearly before you commit.

Is Mill Wood Finance regulated?

Yes. Mill Wood Finance Limited is authorised and regulated by the Financial Conduct Authority for its credit broking activities. Our Firm Reference Number is 729876 and can be verified on the FCA register. We have been operating since 1999.

Speak to one of our specialist brokers in invoice discounting

Whether you are considering invoice discounting for the first time or reviewing a facility you already have, we are happy to talk through your situation. You can book a meeting using the calendar below, visit our Brighton office, call us on 01273 523690 or email info@millwoodfinance.com.