Commentary

138 Invoice discounting and invoice factoring

BUSINESSES vol 4(2) start-up, sale and purchase
| Commentary

138 Invoice discounting and invoice factoring

| Commentary

138 Invoice discounting and invoice factoring

Invoice discounting and invoice factoring are both ways of raising money against the security of the debtors of the business. Briefly, the discounter or factor buys the trade debts of the business, usually referred to as ‘the client’, and then pays the business up to 80% when it receives a copy of an approved invoice1. When the customer pays the invoice2, the discounter or factor pays the balance less a discount charged to compensate him for the period he has been kept out of his money3. As a result, this system allows the client

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