What is Factoring and Invoice Discounting?
Acumen Credit Insurance have close working relationships with many of the leading invoice finance and trade finance companies. This has allowed us to develop the expertise to find the right funding solution for your company. A Trade Credit Insurance Policy can also provide you with improved access to competitive funding solutions.
This type of Invoice Finance allows you to release the value of funds tied up in invoices outstanding by converting your trade debts into cash. This is achieved by assigning the value of your trade debts to the invoice discounter, in return for 75% to 90% of the total invoice value. Once your customer pays, you will then receive the balance less the agreed charges.
With Invoice Discounting, you manage your own sales ledger, credit control and customer interface – the facility can be undisclosed to your customers.
Factoring has all the benefits of Invoice Discounting in terms of a funding solution, along with some additional benefits. With Factoring, the funder carries out your sales ledger management. They perform all aspects of credit control using a team of professional credit controllers. They maintain all sales ledger records on your behalf and remit statements of account to your customers at each month end.
Factoring can also be provided as a hybrid product where you complete your own sales ledger management.
Credit Insurance in support of Receivables Finance
Both Factoring and Invoice Discounting will often seek to bolster the security of the debtor book by seeking to cover the debtors against insolvency. The benefits of a trade credit insurance policy can be assigned to the lender and offers the following features.
- 90% cover against insolvency or non payment
- Work in Progress or pre delivery cover
- Export cover on a World Wide basis
- No premium charged against sales to a UK government agency
- VAT excluded from premium
- Independent of the funder and therefore transferable between lenders
- Binding Contracts cover available