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• 25 Sep

  87 Percent Don't Know Its Easier To Get Factoring Than Invoice Discounting

  Anyone that works within the invoice finance industry will consider it common knowledge that qualification for invoice discounting is harder than qualification for factoring. With a factoring facility, the factoring company has more control over the client's sales ledger (their security) as the factoring company undertakes the credit control function for the client, hence the qualification criteria for factoring are more lenient. With invoice discounting the credit-control is undertaken by the client, giving the invoice discounting company less involvement, which also reduces the cost. However, the lesser degree of control and involvement means that the invoice finance company perceives their risk as being higher and hence it is more difficult to qualify for invoice discounting as the qualification criteria are higher.

  We wanted to know if businesses understood this difference so we asked 100 randomly selected SME businesses: "Do you think that for businesses generally, it would be easier to qualify for factoring or invoice discounting?". 87% of respondents said that they didn't know!

  The majority of businesses simply do not seem to understand the differences between invoice finance products even at this high level, let alone at a detailed level. We need to spread the message!

  By Glenn Blackman