Invoice Discounting - M1xchange

Treds Guide05 Jan, 2023Finance

Invoice discounting is a financing option that allows businesses to access the value of their unpaid invoices upfront, rather than waiting for customers to pay. Here's how it works: The business sends an invoice to the customer as usual. The business approaches a lender, such as a bank or financial institution, and requests a loan based on the value of the unpaid invoice. The lender agrees to provide the loan and advances a portion of the invoice value to the business. When the customer pays the invoice, the lender is reimbursed, along with a fee for providing the loan. Invoice discounting is a useful option for businesses that have a lot of unpaid invoices but need access to cash immediately. It's also a good choice for businesses that have a predictable cash flow and can predict when their invoices will be paid.