Discounting

Discounting, a form of invoice finance, is a financial arrangement where a business uses its unpaid invoices as collateral to secure a loan from a financial institution.

Instead of selling the invoices outright, the business receives a loan based on the value of the invoices, minus a discount or interest. This provides immediate access to a portion of the invoice amount, helping the business manage cash flow and meet immediate financial needs. The business remains responsible for collecting the payment from its customers, and once received, repays the loan plus the agreed-upon discount. Discounting offers a convenient way for businesses to bridge gaps in funding caused by delayed invoice payments.