The benefits of Invoice Discounting

Invoice discounting is ideal for businesses who wish to improve their cash flow through the discounting of their trade receivables.

“Instead of waiting for months the settlement of their invoices, they can have an immediate boost of their cash flow by discounting up to 85% of their full value straight away,” said Shavasb Bohdjalian, Director of Eurivex Trade Finance Limited.

Eurivex Trade Finance Limited ( /) a 100% subsidiary of Eurivex Ltd, a Cyprus Investment Firm regulated by CySEC offers alternative working capital funding solutions for Cyprus and overseas companies.

Factoring vs. Invoice Discounting

Most people are familiar with the term factoring, but in essence, both factoring and invoice discounting are financial services aimed at releasing cash tied up in unpaid invoices.

“The essential difference is who takes control of the sales ledger and responsibility for collecting the receivables and whether the arrangement is confidential or not,” said Athos Kyranides, Consultant at Eurivex Trade Finance Limited in charge of trade finance operations.

With factoring, the business assigns control of its sales ledger to the finance provider who becomes responsible for chasing customers for settlement of their invoices.

With Invoice Discounting, the business retains control of its own sales ledger and is responsible to chase payments from its customers in the usual way.

With Factoring, the customers settle their obligation directly with the finance provider since the arrangement is disclosed.

With Invoice Discounting, customers continue to pay their supplier as there is no need for them to know that a third party is involved.


How does Invoice discounting work?

Whether a business chooses Factoring or Invoice Discounting will largely depend on the size of the business and its ability to manage its sales ledger and collect its receivables.

In Invoice Discounting, a business will continue to issue invoices on credit (up to 120 days) on goods delivered and after the invoice is presented to Eurivex Trade Finance Limited to receive up to 85% of the value of the invoice.

On maturity of the invoice, the business will collect the total value of the invoice from the customer as before, since the customer does not know about the discounting arrangement.

Fees are charged to the client’s discounting account with Eurivex Trade Finance Limited.

From an operational perspective, the business retains control over the accounts receivable, which means that it is responsible for extending credit to customers, invoicing them, and collecting from them. There is no need to notify customers of the discounting arrangement.

Invoice finance is more attractive than bank financing since no personal guarantees or additional collateral is required.


The workflow

  1. You provide the goods/services to your customer and invoice them as usual.
  2. You send the invoice details to Eurivex Trade Finance Limited.
  3. Funds are made available at the pre-agreed percentage of the face value of the invoice. Usually within 48 hours and up to 85%.
  4. You continue to collect the money from your debtors and there is no need to inform the debtors of the financing arrangement.
  5. When your debtor pays, the money is deposited in a bank account in your company name and the balance of the invoice less the agreed fees is made available to you.

In addition to the benefits outlined above, cooperation with Eurivex Trade Finance is extremely simple and quick, unlike the equivalent bank transactions.