सध्या फक्त इंग्रजीत. या पानाचे भाषांतर अजून झाले नाही. हे कॉर्पोरेट फायनान्स आणि बँकिंग टीमसाठी लिहिले आहे, ज्यांनी आम्हाला सांगितले की त्यांना इंग्रजीतच वाचायला आवडेल. MSME पुरवठादारांना लागणाऱ्या पानांचे पूर्ण भाषांतर झाले आहे.
Learn · 4 min
What is factoring?
Factoring is selling your invoice to a finance company, which then collects from your buyer directly. Invoice discounting is borrowing against the invoice and collecting it yourself. People use the two words as if they mean the same thing. They do not.
The difference in one table
| Invoice discounting | Factoring | |
|---|---|---|
| What happens legally | You borrow. The invoice is security. | You sell the debt. It becomes theirs. |
| Who chases your buyer | You do, exactly as now. | The finance company does. |
| Does your buyer know | Usually not. Nothing changes for them. | Yes - they get a formal notice and a new account to pay into. |
| Who takes the loss if the buyer defaults | You. You repay the advance. | Usually them, if it is without recourse. |
| Typical advance | Higher - around 90%. | Lower - around 80%, because they carry more risk. |
| Cost | Lower. | Higher, plus a service fee and stamp duty on the assignment. |
| Effect on your customer relationship | None. | Real. Someone else is now talking to your customer about money. |
Which one are we?
Invoice discounting. We advance against your invoice and you carry on collecting from your buyer exactly as you do now. We do not buy your receivable, and we do not factor.
Advance against invoice
90% advanced, your buyer is not notified, you keep collecting. No notice of assignment and no stamp duty, because nothing is assigned. With recourse - if your buyer never pays, you repay.
The trade-off is worth saying plainly: you get the money today, and the risk of your buyer failing stays with you. If that risk is what you need to move, factoring is a different product from a different provider - it is not what we do.
Which one do you need?
- A buyer you have supplied for years and who always pays? Invoice discounting does the job, and it is what we offer.
- A new buyer, a large order, or a customer you are unsure about? Ask yourself what happens to your business if this one invoice is never paid - because with us, and with any discounting line, you would still repay the advance.
- A customer relationship you do not want a third party inside? Invoice discounting keeps us out of it. Factoring does not - the factor becomes your buyer’s creditor and talks to them directly.