INVOICE DISCOUNTING

Invoice discounting is the process whereby a business can sell some or all its invoices to a third party (“discounting house”) at a discounted rate to increase the working capital of the business. It is a very flexible solution in the sense that the business can decide which debtors, and which invoices it wants to discount. The business can realise cash immediately of up to 80% of the invoice value through this process. From a risk perspective the discounting house looks at the debtor that is responsible for paying the invoices and not as much to the client requiring the invoice discounting. There are two types of invoice discounting, disclosed and undisclosed invoice discounting.

Disclosed Invoice Discounting

Disclosed invoice discounting is the conventional way of doing invoice discounting. Your debtor will be informed of the discounting process and that they will have to pay the discounting house directly on their normal payment terms, hence disclosed. You will continue to issue your invoices to your client directly and send a copy of that invoice to the discounting house to be discounted. The discounting house confirms the invoice(s) with your debtor and proceeds with payment to the client directly.

Undisclosed Invoice Discounting

Undisclosed invoice discounting is also possible should the client not want his debtor to be aware of the fact that he is generating cash flow through invoice discounting. For this process to work the client needs to provide additional security for the discounting house for them to not confirm the invoices with the debtor and to also not receive payments directly from the debtor. The discounting house can also open a bank account in the client’s name that the discounting house controls so that the debtor is still under the impression that they are making payments to client directly. The undisclosed invoice discounting option comes with more “red tape” but is still an option none the less.

HOW IT WORKS

01

Deliver Products / Services

To start the process you first need to deliver a product or render a service to your debtor.

02

Send us your invoice

Send a copy of your invoice / statement to us to be verified with your debtor’s credit department.

03

Payment

Once verified, a payment of up to 90% of the invoice value will be made available to you immediately.

04

Conclusion

We wait for your debtor to pay us directly on their normal payment terms after which we will settle the balance with you.

We can provide a specialised solution that specifically speaks to your business needs.