Invoice discounting

Invoice discounting releases some cash tied up in receivables without waiting for customers to pay. The financier assesses invoice eligibility, debtor quality and concentration, and charges interest and possibly fees. Confidential arrangements can leave customers unaware of the financing, but confidentiality is not universal. The business commonly retains ledger administration and collection, distinguishing it from a full-service factoring arrangement. Exact risk transfer and recourse depend on the contract. Compare the effective cost and controls with alternatives, including the funds retained as a reserve and the possibility of ineligible invoices.