Invoice Discounting and Invoice Finance are terms often switched between lenders when marketing their services.
So what's the difference?
Invoice Discounting has historically been used to describe large corporate banking offerings in Australia. Invoice Finance has more commonly been used in European regions. Thankfully there's some popular modern options that bridge the benefits of both.
How can I avoid some of the confusion?
Confusingly, invoice factoring is sometimes referred to either of the above. Factoring only relates to providers that "disclose" the financing arrangement to the end customer sometimes called "full note" or "notified assignment". Lenders will perform collections on your invoices and is reserved for higher credit risk borrowers.
Invoice finance is becoming the generic term to describe the process of accessing funds against receivables. It's crucial for business owners to be able to determine the true mechanics behind each lenders offering.
Invoice discounting and invoice finance are umbrella terms for two specific types:
Your customer or end-user is unaware of the funding being provided, sometimes also called 'invoice discounting’.
Traditionally referred to as 'invoice factoring', where invoices have a notice that tells the customer to pay the funds to the financier and the financier is free to chase the debt directly.
How does Waddle’s Invoice Finance fit in?
Waddle’s invoice financing transactions are structured to resemble a perpetual line of credit similar to how a credit card or bank overdraft works.
You can draw down and repay funds as you need, only paying interest on the balance.
Instead of the line of credit based on the value of your real estate, it’s instead tied to the value of your on-going receivables and is a completely confidential service.
You link your accounting software and Waddle establishes a credit limit against your invoicing that automatically adjusts as you raise new invoices or reconcile payments in your accounting software.
If you're using cloud accounting and need funding to fit within your existing work flows, Waddle could be one solution.