Question 1

What is invoice discounting or factoring?​

Accepted Answer

Suppliers get early payment on invoices through a factoring company. The company pays a percentage upfront, and buyers repay them on the due date.​

Question 2

How does invoice discounting benefit me as a buyer?​

Accepted Answer

It helps suppliers with cash flow, strengthening relationships, reducing supply chain risks, and potentially improving terms and pricing.​

Question 3

What is the cost of invoice discounting for buyers?​

Accepted Answer

There’s a fee charged by the factoring company, usually a small percentage of the invoice. Costs vary by company and terms.​

Question 4

How does invoice discounting affect my cash flow?​

Accepted Answer

It doesn’t impact your cash flow directly. You pay the factoring company on the due date, which helps stabilize your supply chain.​

Question 5

Will invoice discounting affect my relationship with suppliers?​

Accepted Answer

It can improve relationships by supporting supplier stability, leading to better partnerships and negotiation terms.​

Question 6

How do I get started with invoice discounting for my suppliers?​

Accepted Answer

Contact a factoring company to discuss options and set up an agreement.​

Question 7

Are there any risks involved in invoice discounting?​

Accepted Answer

The main risk is potential impacts on customer relations due to payment collection management. Many companies offer discreet services to handle this.​

Question 8

Can I choose which invoices to discount?​

Accepted Answer

Yes, you can select which invoices to discount based on your needs and agreements.​

Question 9

How will invoice discounting impact my financial statements?​

Accepted Answer

It appears as a liability or expense in your financial statements, but doesn’t affect revenue directly.​

Question 10

Can invoice discounting be used for all suppliers?

Accepted Answer

Yes, as long as suppliers agree and the factoring company accepts the invoices.​

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