When people talk about invoice discounting, they often refer to the banks' solution where you receive 70% of the capital directly when you transfer the invoice and the remaining 30% when the invoice is paid.

Invoice factoring is often used when the customer's recipient is not creditworthy for the amount, as you can still have the option of borrowing against the invoice and are actually faced with the same risk as you invoiced yourself - the big difference is that you get some of the money directly.

We saw a problem in this as customers need to book payments on two occasions instead of one, which means more work, not less.

That's why we decided that whether it's an invoice purchase or an invoice discounting, we will always pay the full amount minus our fee directly. No matter what the invoice recipient looks like.

Invoice factoring means that the company mortgages its invoices with a factoring company. This means that the parties agree to mortgage the invoices (the mortgage rate is usually around 70% of the invoice amount). The company that assigns the invoices must then notify its customers that the invoices have been assigned, and when the customers pay the invoices, the payment goes to the factoring company, which then handles reminders, accounts receivable and possibly debt collection.

Get started with a factoring solution today!

My colleagues and I are here for you on 020-150 111 or at factoring@qred.com.

/Alexander Roos