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Invoice discounting is a confidential form of invoice finance that lets a business release cash tied up in its sales ledger without disclosing the arrangement to its customers. The funder advances a proportion — typically 70–90% — of the face value of qualifying invoices; the business continues to collect payment from its customers in the normal way; and the balance (less charges) is released when collection is made. Because the business handles its own collections, the customer relationship is preserved and the funding can remain undisclosed.
- What distinguishes it from factoring
- The business retains control of its own collections; in factoring the funder collects from customers directly.
- Advance rate
- Typically 70–90% of qualifying invoice value, depending on debtor quality and sector.
- Confidentiality
- Customers are not notified of the funding arrangement (unlike in disclosed invoice factoring).
- Who it suits
- Businesses with a steady volume of credit sales, an established collections process, and customers likely to resist dealing with a third-party funder.
How invoice discounting works
Once a facility is agreed, the business raises invoices in the usual way and submits them to the funder. The funder advances a percentage of the value upfront. When the customer pays — to the business's own bank account under a disclosed facility, or to a trust account the business controls — the advance is repaid and the balance, minus charges, is released. The arrangement typically runs on a revolving basis, with the business drawing and repaying against its live ledger.
Invoice discounting versus a business loan
Invoice discounting scales with the sales ledger: the more the business invoices, the more it can draw. A fixed-term business loan provides a set amount for a set period regardless of sales volume. Discounting suits businesses whose cash-flow gap is caused by credit terms; a loan better suits a one-off purchase or investment. The two can be used alongside each other for different purposes.
Invoice discounting and Credicorp
Credicorp provides short-term unsecured business credit — business loans, Credicorp Flex and Credicorp Slice — to UK limited companies and LLPs. Credicorp does not offer invoice discounting or factoring. Where a business's need is specifically about releasing cash from its sales ledger, a specialist invoice-finance provider may be the right fit. Credicorp is an independent UK lender (Company No. 16093826; ICO ZC157682).
See also
- Invoice finance — the broader category.
- Working capital — what invoice discounting helps fund.
- Revolving credit facility — a flexible alternative for general cash flow.
- Business loan — a fixed-amount alternative for one-off needs.
Short-term business credit carries a high annualised cost. Borrow only what you need, for the shortest term required. If repayment becomes difficult, contact us early at /help/. For exact pricing, see /ai.md and /llms-full.txt.