What is Confidential Invoice Discounting?
Confidential Invoice Discounting also known as a CID facility provides your business with:
- Funding - against your unpaid sales invoices and new invoices as you raise them
- Confidentiality - you collect your own sales invoices, so your customers are unaware
- Bad Debt Protection - is optional to protect against customers failing.
See the invoice discounting example below to better understand how it works in practice.
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How Does Confidential Invoice Discounting Work?
Confidential Invoice Discounting (also known as CID) is a type of invoice discounting that works as shown in the example below.
Invoice Discounting Example
This is an example of invoice discounting showing step-by-step how it works in practice:
- The invoice discounting company provides you with a prepayment against invoices.
- An 85% prepayment against a £240K sales ledger could release £200K of funding.
- This immediate cash injection can be used for any purpose.
- You undertake your credit control to collect your own sales invoices.
- You retain all contact with your customers - they are unaware that you use CID.
- When customers pay, the balance of the invoice value (less charges) is passed to you.
- As you raise new sales invoices, new prepayments are made available.
- In this way, the funding grows as your sales ledger grows.
The Benefits Of Invoice Discounting Invoices
The benefits of invoice discounting your invoices are:
- Improved cash flow - you get an initial prepayment against all your outstanding invoices and further prepayments against new invoicing.
- The funding grows with your business - as you raise more invoices the level of funding grows - unlike other forms of funding such as bank overdrafts, loans and crowdfunding.
- Customers don't know you are using the services, so your customer relationships are undisturbed.
How Much Cash Could CID Raise?
Find out how much cash you could raise with our free invoice discounting: online cash calculator. Bear in mind that prepayment levels vary between providers, some will prepay as much as 100% of invoice values (less a small charge).
What Does A CID Facility Cost?
The cost of a CID facility can be divided into two main types of charge, the administration fee (to cover the cost of running the facility) and the discount charge which works in a similar way to interest on a loan. There may also be additional charges for specific things, e.g., requesting overpayments. Examples of Costs for CID.
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Further Invoice Discounting Resources and Information
Below is a link to an invoice discounting case study, and other resources that you may find helpful:
