Invoice Finance is an industry with its own terminology. Factoring and Discounting are the two main forms of invoice finance, differentiated by who retains control of the sales ledger.
Factoring requires the ‘factor’ or lender to take control of the invoice collection process, meaning your customers will become aware that your company is using a finance solution.
With invoice discounting, the borrower retains control of the invoice collection process as usual, meaning confidentiality can be retained. Although the loss of confidentiality is often mooted as a disadvantage of factoring, some businesses find that handing over the responsibility for debt collection can free up valuable time for running other aspects of the business.
