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Invoice Discounting (ID -also known variously as Debtor Finance or Factoring) involves borrowing money against the value of your debtor book rather than the usual property security.

Several of the major Banks have moved away from this type of funding over recent years as it is not considered to be mainstream.

Both Westpac and NAB continue to offer Invoice Discounting as a core product and do so extremely well.

Their target business is usually one with a very sizeable turnover and a healthy spread of debtors.

There are also specialists in this field who are happy to assist a growing business who may not fit either Westpac or NAB's lending criteria. 

Aston Mortgage and Finance has access to an extensive range of Invoice Discounting funders to suit your business's needs.

How it works >

A financier will generally advance you up to 85% of the value of each qualifying debtor and charge a fee/interest for doing so. Once the debtor has paid the invoice in full the remaining 15% is advanced.

There are several ways of operating an Invoice Discounting Facility. In all cases, you will retain the relationship with your customer from a sales perspective but unless your ID is a 'confidential' facility, your customers will be required to pay into the ID provider's bank account and may receive phone calls from the ID provider directly. A 'confidential' provider will ensure that the bank account is still in your name and that their presence is not known to the customer.

Invoice Discounting is an excellent method for speeding up the cash flow of a business. Funds will be received within a couple of days of invoicing a client rather than the 30 or 60 day terms typical for businesses. This can effectively eliminate any need to offer discounts for early payment of invoices whilst also allowing you to take advantage of discounts offered by their suppliers for early settlement of accounts.