Wondering exactly what the invoice discounting costs for your company will be? There is actually no simple answer since costs vary depending upon the situation and how much money that you are trying to secure. Naturally, the less money you are trying to get, the less you will have to pay for the invoice discounting service. In general, invoice discounting is the best possible way to get money from your outstanding invoices because it has the least expensive rates when compared to other options.
The reason invoice discounting has the lowest rates is that it is more difficult to get than other types of invoice advances may be. For example, standard invoice factoring is more expensive because the qualifications to get it are fairly minimal. You don’t have to prove your company has a certain net worth or that the outstanding invoices are going to be paid based upon payment history to get standard invoice factoring. However, with invoice discounting you might need to demonstrate both of these things. With invoice factoring you won’t have to show that you have a credit history with the companies that owe money, but with invoice discounting you will need to prove an established history that shows the invoice is going to be paid based upon the history of your association with them.
Invoice discounting is such a sought after form of invoice management because it lets you not only pay low costs to get up to 90 percent of the invoices outstanding, but also because your company is still in control of collecting the money owed. Your arrangement with the invoice discounting lender is similar to that which you would have with a traditional banking institution. Your company’s invoices do not change in ownership, and your only responsibility is making sure the lender is paid as per the terms of the agreement you signed with them.
Since invoice discounting and invoice factoring are so different, it is vital you work with a company that understands the differences well. You need to find a company that can give you invoice discounting quotes from the lender best suited to your needs, and from the lender that can give you the cheapest rates. If you can secure this kind of invoice financing, it is definitely a great way to manage your company’s invoices.