What is the difference between invoice discounting and factoring

Invoice discounting and invoice factoring are two similar terms that are sometimes interchangeably used but there are minor differences between the two.  Both are forms of invoice financing wherein a company's accounts receivables are used for borrowing money.  So what is the difference between invoice discounting and factoring? We all know how long it usually takes one company to pay another for services rendered or products delivered.  We have heard the usual, "It's still being processed." excuse from accounting; which can go on for weeks or even months.  So what if you can get paid instantly upon issuance of your invoice?  Well this is what invoice factoring is.  You are basically selling your invoice to a factoring company for about 80-90% of the total invoice.  It is now in the factoring company's hands to claim the payment and their responsibility to ensure that this is collected.  Upon the invoice's collection, the advanced amount is then recovered by the factoring company who forward it in to you less a charge for their services. It is important to note that with factoring the factor company chases your debtor on your behalf and therefore, in effect, they run your sales ledger and debt collection. Both recourse and non-recourse factoring is available with the former meaning you will take any bad debts that arise but the latter means the factoring company assumes the risk. This second option is naturally more expensive. At Choice Money, we will help your company find the best deals on invoice factoring.  We will handle everything for you.  All you need to do is send your invoice then collect your money. Invoice discounting, on the other hand, is a form of short-term borrowing used by companies to finance its various operations.  For example, your company has just been awarded a new project or contract; we can help you finance this project for up to 90% of the total contract through invoice discounting.  Just explain to us the company's thrust and the scope and nature of the project, and we will then match a suitable discounting firm that would suit your needs. One major difference between invoice discounting and factoring is that in invoice discounting it is still your responsibility to collect the payment for the invoice in mention, which is usually upon completion or termination of the project.  Upon receipt of payment, the collected amount should be transferred to a designated account.  The discounting firm would then return the remaining funds to you minus the advanced amount plus a small fee. All of this is done with the utmost discretion, so be assured that all information and transactions will be kept confidential from your client. For further information please either call u son 0845 1260350 or complete our Invoice Finance enquiry form here and we will call you.