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.

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.

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.

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.