DEFINITION OF TERMS

We explain the commonly used terms

Invoice finance is made up of two main products, invoice factoring and invoice discounting. However there is a range of other associated products and corresponding terminology which has grown around invoice finance facilities.

This section of our website has been created to explain the common terms and the ones people come across and are unsure of.

Invoice finance
Invoice finance is the generic term name for a business finance facility that advances funds against unpaid invoices. It consists of two main products: invoice factoring and invoice discounting.

Invoice factoring
Invoice factoring is an invoice finance product which advances funds against unpaid invoices where the lender takes security over and assignment of the invoice and normally takes responsibility for debtor management and credit control.

Invoice discounting
Invoice discounting is an invoice finance product which advances funds against the outstanding sales ledger where the borrower retains control of their debtor book management and as such the facility is classed as a confidential facility.

Asset finance
Asset finance covers a wide range of business finance products where businesses can have immediate use of the asset and pay for the asset over a period of time. The lender generally takes an initial deposit and uses the asset as security.

Stock finance
Stock finance falls into two categories which includes using existing stock to raise finance and the facility offered by many specialised lenders where funds are advanced to purchase stock and discounts are thus negotiated with suppliers for early payment.

Export finance or factoring
Export factoring works very much in the same way as domestic factoring by advancing funds against overseas invoices.

Invoice finance cashflow
The cashflow generated from an invoice finance facility.

Invoice finance businesses
Businesses using invoice finance.

Invoice factoring explained
Invoice factoring is a business finance facility that advances funds against a business’s unpaid invoices.

Invoice factoring costs
Invoice factoring costs are the costs associated with an invoice factoring facility. These comprise of two main parts the management fee for the administration of the facility and the interest charge applied to the amount of funds advanced at any point in time.

Invoice factoring blog
This is a discussion page on an invoice factoring website.

Invoice factoring company
An invoice factoring company is the lender of the funds for the invoice factoring facility. This will generally be a division of one of the major banks or a specialist financial institution.

Factoring services
Factoring services refer to the range of services associated with the invoice factoring facility and includes ledger management, credit control and bad debt protection.

Invoice factoring help
The help facility offered by invoice factoring companies or a request by businesses interested in finding out more about this funding facility.

Invoice factoring cashflow
This is the cashflow generated from an invoice factoring facility.

Invoice discounting definition
Invoice discounting is a business funding facility that advances funds against unpaid invoices. It differs from invoice factoring in that it is classed as a confidential facility as the businesses customers are not made aware that the facility exists.

Invoice discounting costs
Invoice discounting costs are the costs associated with an invoice discounting facility. These comprise of two main parts the management fee for the administration of the facility and the interest charge applied to the amount of funds advanced at any point in time.

What is invoice finance
Invoice finance is a business finance facility that advances funds against a business’s unpaid invoices.

Finance invoice
Finance invoice is a variation of invoice finance which is a business finance facility that advances funds against a business’s unpaid invoices.

Invoice financing and invoices finance
These are additional descriptive terms used by people to describe invoice finance.

Invoice discounting finance
This is the finance facility for invoice discounting which is a business funding facility that advances funds against unpaid invoices in a confidential manner so that the businesses customers are unaware of the facility.

SME invoice finance
Invoice finance facility for small and mediums sized businesses.

Invoice finance UK
This refers to invoice finance for the UK only. It should also be noted that export finance is a finance facility that can be set up in the UK to help fund sales to foreign countries.

What is invoice factoring?
Invoice factoring is the factoring facility that advances funds against a company’s debtors ledger or unpaid sales invoices.

Factored invoice
This related to a particular invoice that has been factored i.e. an invoice that has had funds advanced against it and been assigned to the invoice factoring company.

Invoice discounting and factoring
These two terms are often classed together but although invoice discounting and invoice factoring are part of the family of invoice finance services they are two distinct and separate products.

Invoice factors
Invoice factors refer to the invoice factoring company who are the lenders of the business finance and will be a financial institution of some kind.