Invoice discounting Invoice discounting is a variation on factoring where the client company collects its own debts, but the lender still advances money against them. One advantage of this is that the fee charged is far smaller, though there is still a fixed percentage of turnover charged for processing. It is usually confidential, so that none of your customers need know that you are borrowing in this way, which appeals to some people. It does mean that you are entirely responsible for collecting your own debts. Are all companies eligible for invoice discounting? Factoring and discounting companies take the view that they have far less control and security with invoice discounting than with factoring, so they are much more stringent about the type of companies they deem eligible for it.
To qualify for invoice discounting, companies would normally need to be profitable, established for several years with audited accounts, and have an established and strong credit control function. It is not unreasonable for lenders to wish to be sure that the debts they lend against are real and will be collected efficiently.