Invoice Discounting

Invoice discounting is a finance facility used by businesses to leverage the value of their sales ledger and get an advance on outstanding invoices. This allows businesses to increase cash flow and access up to 100% of their receivables by using their unpaid invoices as collateral.

It’s the simplest way to benefit from invoice financing because you remain in charge of collecting the payment from your clients whilst the lender simply advances the cash.

Sonovate makes this easy — we do that hard work so you can focus on growing your business.

Why Use Sonovate for Your Funding Needs?

Thousands of businesses — small and enterprise alike — choose Sonovate because, unlike the banks, we’re really easy to work with and we’re on hand to help you anytime. With a global presence in 44 countries and more than 4b funded, we help recruitment agencies, consultancies and the labour marketplace more generally to gain cash flow predictability. 

And unlike others, we pay 100% of the invoice.

  • Simple setup.
  • No hidden fees or charges.
  • We don’t tie you into long contracts.
  • We won’t place a credit limit on you!
  • Bad debt protection included.

Plus much, much more!

Leave your details with us, we’ll show you round the platform and get you funding in no time.

How our customers benefit from invoice discounting

Steady cash flow

The most significant advantage of invoice discounting is the steady flow of cash this financing provides. Unpaid invoices can take weeks or even months to materialise into cash. Invoice discounting removes the need to wait for clients and allows companies to focus on more important aspects of the business.

Quicker turnaround

Not only do you benefit from a quicker turnaround with your cash advances, but you also have a quicker turnaround for approval. Being approved by a bank can take weeks or even months. Invoice discounting companies can quickly assess your case and get you started in a matter of 24 hours.

Less is more

Invoice financing is a great option for companies that depend on a small number of clients for a high volume of income. In these instances, a single late payment could derail the operations of an entire business.

Better working capital

Invoice discounting provides better working capital to complete projects, pay contractors, hire new employees, and cover any expenses. This reliable stream of revenue is also vital if you want to scale your company quickly and sustainably.

Stay in control

Unlike invoice factoring, invoice discounting allows businesses to stay in control of their sales ledger. The lender simply advances the cash whilst the business collects payments as usual.

No risk

The customer doesn’t even need to know that there is a third party involved. Since there’s no need to disclose this information, you pose no risk of potentially damaging relationships.

Bargaining power

Some customers aren’t too keen about involving third parties and businesses may prefer discretion because it gives them more bargaining power.  You’re also able to uphold the same standards of customer service that your clients are used to, which is important for your brand’s reputation.


Invoice discounting’s confidentiality capabilities come with a host of benefits, one of the key advantages being the ability of businesses to maintain a strong relationship with their clients. By keeping the financial agreement confidential, businesses can keep their financial matters private and sidestep any unnecessary speculations — ensuring both professionalism and a competitive advantage.


What are the different types of debt factoring?

The three types of debt factoring include recourse factoring, non-recourse factoring, and confidential or disclosed factoring.

Recourse factoring is the most common type of debt factoring because it is also the least expensive. In this instance, if a debtor does not pay their outstanding invoice, companies buy back these invoices and return the cash advance in full.

On the other hand, non-recourse factoring is when the factoring company assumes all the risk of unpaid invoices. If your customer doesn’t pay, the financier takes responsibility for the loss and cannot ask you for the money back. Since non-recourse factoring entails added risk, the factoring fees associated with this agreement are much higher.

Confidential or disclosed invoice discounting is known as a middle point between invoice factoring and discounting. It’s an option for companies that wish to be discreet about their use of invoice factoring services, but don’t have a strong enough balance sheet to qualify for invoice discounting.

What’s the impact of factoring on the balance sheet?

Overall, invoice factoring helps reduce the likelihood of cash flow gaps on your balance sheet. Depending on the payment agreements you have arranged, clients can take anywhere from 30 to 90 days to pay for your goods or services.

A business needs cash in order to survive and factoring can help companies’ cover their costs by advancing cash. Unlike a loan or an overdraft, invoice factoring is more tailored to the financial needs of a business and it won’t take weeks for the financing to be approved.

Invoice factoring is an effective way to plug the cash flow gaps as quickly and effortlessly as possible. This financial service can be up and running in as little as 24 hours, allowing businesses to access cash and pay their contractors on time, every time.

Is invoice discounting considered debt?

No, it isn’t considered debt because you’re not borrowing additional capital. You’re simply borrowing money that is already indebted to you.

What happens if a client doesn’t pay an invoice?

Before you settle the contract, you and the lender disclose what happens if a client doesn’t pay an invoice. Under these circumstances, there are two options you could choose from, either a recourse or non-recourse invoice discounting agreement.

If you opt for the recourse invoice discounting, you will take responsibility for the unpaid invoices of your client. This means you will have to pay back the full amount of the cash that was advanced to you within an agreed period of time.

If you have opted for non-recourse invoice discounting, the liability for unpaid invoices is transferred to the lender. However, some lenders will only take full responsibility for the non-payment if the debtor has declared bankruptcy. Non-recourse invoice discounting is the less popular option because the financier takes a higher risk and therefore the fees for this service are higher too.

Sonovate offers its clients bad debt protection on 90% of their clients’ net invoice value. In other words, your business’s cash flow can remain unaffected in the case that a debtor fails to finance their outstanding invoice.

For example, if you issue an invoice for £10,000, Sonovate will offer protection for £9,000 worth of the debt. However, this bad debt protection only tends to be available to clients whose debtors have payment terms of less than 60 days.

How long does it take to set up?

Setting up services is relatively fast in comparison to more traditional forms of financing.

Invoice financing companies can arrange the facility in a matter of 24 hours. Once your sales ledger is approved, cash advances are issued almost instantaneously.

What checks are involved with this finance facility?

The entry requirements to qualify for invoice discounting are substantially higher than those needed to qualify for invoice factoring.

More specifically, lenders will typically require a business to have a proven history of profitability, as well as a minimum turnover of £250,000.

Is invoice discounting regulated?

No, invoice discounting is not currently regulated by the Financial Conduct Authority (FCA) in the UK.

Given that the invoice financing industry is unregulated, businesses seeking assistance should always make sure that their contract outlines all fees and clearly outlines the termination clause.

However, the invoice discounting sector prides itself on maintaining a clear code of conduct that ensures excellent service for its customers. Plus, the regulation of the industry would lead to added regulation costs, which are typically passed on to customers.

Is invoice discounting suitable for startups?

Invoice discounting is a viable solution for startups, as long as they meet the necessary requirements to qualify. Startups rely on a steady flow of cash for their survival, therefore invoice financing is a great solution for emerging companies that are in need of capital.

However, many startups might not have large annual turnovers or extensive records of profitability. Therefore, these businesses may be better suited to other forms of invoice financing, such as invoice factoring.

Can small businesses make use of invoice discounting?

Invoice discounting services are typically awarded to larger, more established, companies because this premium form of invoice financing has higher entry requirements.

To qualify for invoice discounting, most lenders typically require a proven track record of profitability and an annual turnover of at least £250,000.

You also need to prove your company is capable of managing credit collection and has the resources to manage the collection of payment.

Nevertheless, SMEs are excellent candidates for invoice factoring which is a similar form of invoice financing.

How is this different from a business loan?

Invoice financing services benefit from a much quicker turnaround than traditional financing methods.  Business loans take a long time to be approved and cash advances can take a long time until they appear in your bank account.

With invoice discounting, there’s no need to wait weeks for a qualification assessment and, once you’re approved, the cash is advanced almost immediately. Invoice discounting offers a quick and efficient solution to short-term cash flow problems.

Another difference between invoice discounting companies and business loans is that the former tend to ask for less security compared to more traditional forms of financing.

Banks place a greater focus on your company’s credit history, whereas, invoice financing companies pay more attention to the credit quality of your customers instead. This makes it easier for less established businesses to secure financing.

How can you maximise your business' cash flow with an invoice discounting dacility?

There are a host of ways that a company can maximise cash flow opportunities via invoice discounting, such as the streamlined invoicing process it facilitates. Invoice discounting ensures that the invoicing process is timely, allowing for increased predictability, flexibility and room for growth. 

Further still, invoice discounting increases monitoring capacity. Specifically, invoice discounting software, such as Sonovate’s intuitive platform, allows businesses to keep a close eye on accounts receivable and implement credit control measures accordingly. 

Ultimately, invoice discounting can lead to enhanced financial stability for a business, particularly when they partner with a reputable invoice discounting provider.

How does selective invoice discounting optimise your receivable ledger?

Selective invoice discounting optimises your receivable ledger by allowing businesses to select specific invoices for financial, rather than all. A select approach facilitates more flexibility and control over the financing process. 

By taking on a strategic approach to invoice selection — choosing those with longer payment terms or from slower-paying customers, for instance — businesses can access immediate cash flow without compromising their entire sales ledge.

Sonovate’s Platform

Our embedded payment solutions platform offers invoice discounting services in the simplest way. Sonovate has one centralised system to manage various features, including contracts, timesheets, and invoices, all in real-time.

If you feel like your agency could benefit from the use of invoice discounting services, book a consultation today.


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