What is invoice discounting?

Invoice lending, also known as invoice financing or factoring, is a useful tool for businesses that need to improve their liquidity and get quick access to capital.

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In other words, invoice financing means that as a business owner, you take out a loan based on your customer invoices, which serve as collateral for the loan.

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The lender uses the invoices as a basis for the loan. Typically, you can borrow up to a certain percentage of the invoice amount, usually around 70-80%. The remaining amount is paid out when your customers pay the invoice.

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It is important to note that the invoices remain in your ownership and on your balance sheet, and the lender does not take over the risk of customers not paying their invoices.