What is Invoice Discounting and how does the process work?

Award winning Invoice Discounting facility in the UK from Hitachi Capital.

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Invoice discounting is an invoice finance facility when a company's unpaid accounts receivable is used as collateral for a loan. Invoice discounting companies enable businesses to leverage the value of their sales ledger.

When sending out invoices to customers, a proportion of the total amount becomes available from the lender, which provides your business with a source of working capital throughout the month while you wait for the payment of your invoice to be processed.

With invoice discounting, you maintain responsibility for your sales ledger as well as your payment chasing and invoice processing. The main difference between this method and invoice factoring is that your customer  is not aware that you have taken on cashflow finance. If you prefer to keep the financial arrangement confidential from your customers then Invoice Discounting may be the right product for you.

You no longer have to wait up to 120 days to receive payment for your goods and services, and you remain in charge of your own credit control processes, meaning that you continue to chase late payments and therefore your customers are not made aware of our involvement.

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You remain in charge of your own credit control processes, meaning that you continue to chase late payments and therefore your customers are not made aware of our involvement.

Invoice Discounting companies benefit from using Hitachi Capital:
    • Improved cash flow - release money tied up in unpaid invoices and boost your cashflow
    • Flexibility - your funding line increases at the same rate as your turnover meaning that you don’t need to renegotiate terms
    • Save time - relieve your business of the burden of credit control and concentrate on your core business 
    • Bargaining power - invoice factoring can help you to negotiate better terms with your suppliers
    • Faster growth - grow your business at a much faster rate due to the flexible funding line
    • Award-winning service - benefit from our award-winning client service

We have revolutionised invoice discounting with our digital onboarding process


We are an award winning invoice discounting company

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  • Confidential Invoice Discounting Services

    Hitachi Capital Invoice Finance supply Invoice Discounting facilities to companies working in a wide range of sectors around the UK, with a turnover of £250,000 or more.

    Invoice Discounting is a perfect solution for issues such as late payments and seasonal demand which can cause a strain on your company's cash flow and prevent you from reaching your growth potential.

    Our Invoice Discounting facility will make the cash available quickly, leaving you to concentrate on running your business and not simply chasing invoices.

    You are able to utilise the money quicker to invest in assets and staff to help you secure new contracts or expand in to new areas.

    We are already supporting over 700 SMEs in the UK to reach their growth potential by using Invoice Finance to release cash tied up in unpaid invoices.

  • Why choose Hitachi Capital Invoice Finance?
      • A 6 month trial period so you can be sure the product is right for you
      • Followed by a 6 month rolling contract – we don’t tie our clients in for long periods
      • A one fee solution with no hidden fees
      • Award-winning client service by our team of expert Client Managers
      • Our Relationship Management team are in the field to visit you in person
      • We are part of Hitachi Capital (UK) PLC, a company that is going from strength to strength – we’re here for the long term.

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How does an invoice discounting facility actually work?

Invoice discounting facilities allow medium-sized businesses to borrow money against the value of their unpaid invoices. Generally speaking, invoice discounting facilities are best suited to B2B businesses that offer long credit terms to their clients. They’re valued for their ability to accelerate cash flow, and they can be invaluable to businesses that want to:

Expand their operations Invest in stock, machinery or equipment Employ new members of staff Fix long-standing issues with cash flow

The invoice discounting process

To explain the process underpinning this increasingly popular form of invoice financing, we’ll pretend that you run a medium-sized manufacturing business that offers 90 day credit terms. Using an invoice discounting facility, you would follow a simple 5 stage process:

Supply your clients with goods, and then invoice them as per your normal practices Forward a copy of your invoices to a finance provider After 24-48 hours, your provider will release funds to match a pre-arranged percentage of the invoice’s value (normally between 70-90%) When your debtor settles the invoice, your provider releases the rest of the invoice’s value minus a small service fee

What are the advantages of using an invoice discounting facility?

Invoice discounting facilities allow you to boost cash flow and fund growth initiatives without waiting for your clients to pay their invoices. Compared to other invoice financing arrangements, invoice discounting is generally easier to set up and manage because:

All of your invoices are forwarded to a provider The broad spread of debtors means there’s no need to individually vet individual clients

Invoice discounting facilities are completely confidential. Some invoice financing arrangements (including invoice factoring facilities) force you to allow a provider to collect debts on your behalf, but with invoice discounting facilities, you retain full control over the credit collection process.

As such, you’ll be able to manage every aspect of client communications, and provide consistent customer service that’s in-line with your company’s standards. Retaining control of the debt collection process also means that you can continue to conduct business without worrying about what your buyers think of your financial arrangements, and we know that matters to a lot of UK businesses.

Is invoice discounting right for my business?

Generally speaking, invoice discounting facilities are best suited to companies that:

Sell to other businesses on credit terms Turn over more than £250,000 a year


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Contact our friendly UK advisors on freephone

0808 250 0859

08.45 - 17.15 Monday to Friday


Case studies
Care agency services

Care agency services

From start to finish I was very happy with the service. Any changes were resolved straight away. The team took time to help me use the system and my client manager also came to visit me, so I can put a face to the person I speak to. It's these little touches that help businesses like mine. I’m already recommending Hitachi Capital to other businesses.

K P Burnley, July 2018

Construction recruitment

Construction recruitment

Hitachi Capital has been a breath of fresh air. From the initial contact, they have taken the time to fully understand our business and we have been given a seamless service of the highest quality. The team have been extremely efficient, always available, very communicative and have helped our business grow in the UK, Europe and now the United States.

M Stone, June 2018


Please note that costs are an estimate only and are based on the entered values. Your final quote may change once a Business Development Manager has assessed your business in more detail.

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Is invoice discounting long term or short term?

Invoice discounting can be both a short term and long term form of borrowing. The majority of businesses incorporate Invoice Discounting in to their standard business operations, with any associated costs factored into overall profit margins and view the facility as a longer term solution.

 

What is Confidential Invoice Discounting?

Confidential invoice discounting (commonly known as simply “Invoice Discounting”), allows you to release money from your unpaid invoices to improve your cashflow.

 

What is Invoice Discounting in the UK?

Invoice discounting is another type of borrowing against your outstanding invoices and is used to help improve a company's cash flow position. It uses a company's accounts receivable as collateral for a loan which is issued by the finance company.

 

What is the difference between invoice discounting and factoring?

Invoice discounting allows you to retain control of the collection process and stay in contact with your customers directly, whereas with invoice factoring, the business sells its invoices to a third party and then the factoring company chases the unpaid invoices and sends payment reminders directly.

Generally speaking, invoice discounting facilities are used to leverage cash from your entire ledger, which means you’ll forward every invoice to your lender, and then settle your debts as you collect from your clients.

 

Is invoice discounting a good idea?

Invoice discounting is a good option is you carry out in-house credit management processes and have good relationships with your customers. It is also a good idea if you want to keep our involvement confidential. Businesses looking for this facility usually need to have a higher turnover of around £500,000 plus.. Otherwise, Invoice Factoring would be more suitable for a business looking to outsource their credit control and not have the confidentiality in place.