Differences In Discounting Vs Factoring

When businesses are experiencing challenges in cash flow due to the time between invoicing and payments from customers, two options are possible that are simple, quick and effective for the business.

These two options include factoring and invoice discounting. They both avoid all the challenges with lengthy applications, repayment, interest, and concerns about the credit score of the business, as typically found with loans and lines of credit.

When taking a closer look at invoice discounting vs factoring, there are several important differences to keep in mind. Companies like United Capital Funding focus exclusively on factoring as an option for immediate funding for businesses.

Factoring Basics

With invoice discounting vs factoring, the process is basically the same. A business just completes our quick application, which we will approve within 24 hours. Then, after submitting the accounts receivables you wish to factor, we will advance up to 80% or more of the value.

We retain 20% until your customer pays the invoice. During this time, we manage the account, leaving you to focus on your business. Once the payment is received, we deduct our fee and forward the balance to your account.

Invoice Discounting

Invoice discounting offers the same process, however, when considering invoice discounting vs factoring, keep in mind that your business manages the invoices. This means you will be required to collect the payments from your customers and then submit them to the invoice factoring service.

The rates for invoice discounting will also be different from factoring. To find out the rates and to get a quote for United Capital Funding factoring, give us a call today at 877.894.8232.