Quick Answer
Both release cash from unpaid invoices, but factoring includes credit control (the provider chases payments), while discounting is confidential (you chase payments). Factoring suits businesses wanting outsourced collections; discounting suits those wanting to maintain customer relationships.
Side-by-Side Comparison
Invoice Factoring
What it is: The finance provider purchases your invoices and manages your sales ledger, including chasing customer payments.
Key Features:
- Provider handles all credit control
- Customers know you're using finance
- Professional collections service
- 70-90% advance rates
- Frees up admin time
Invoice Discounting
What it is: You borrow against invoices but retain control of your sales ledger. Your customers don't know you're using finance.
Key Features:
- Completely confidential
- You chase your own payments
- Maintain customer relationships
- 80-95% advance rates
- Often cheaper than factoring
Key Differences
Choose Invoice Factoring if:
- You want to outsource credit control
- You have limited admin resources
- You want professional collections
- Customer relationships aren't a concern
- You need help managing late payers
Choose Invoice Discounting if:
- You want to keep it confidential
- You have good customer relationships
- You can manage collections yourself
- You want lower costs
- You prefer full control
Not Sure Which Option is Right?
Speak to our finance experts. We'll help you choose the best solution for your business.