Invoice discounting is similar to invoice factoring, the difference being that the sales ledger management and the factoring company does not take up the collection responsibility. Invoice Discounting is good for businesses that are established with sufficient staff and infrastructure to keep accounts. The option is there to disclose or not disclose the service to the customer. Invoice discounting therefore allows more confidentiality than invoice factoring.

Invoice discounting, like invoice factoring assures the working capital necessary in times of need, and acts as an ideal debt management solution for a business. In fact, for flourishing businesses invoice discounting is a smart option for ensuring a continuous cash flow needed as capital. Invoice discounting extends a cash advance up to 90 % of the value of outstanding invoices, usually within 24 hours. Invoice discounting affords asset based lending as well. Invoice discounting and factoring carry charges such as administration or service charge for services offered and interest charge for the cash advanced.

Another advantage of invoice factoring discounting is the credit insurance policy assured- this gives protection against bad debts. There is the option to choose recourse or non-recourse facility. Both with invoice factoring and discounting, funds are available proportionate to the sales. The only assurance that the factoring discounting company needs is regarding the soundness and reliability of a business.

Invoice factoring discounting facility can be availed online also, which nullifies the numerous phone calls or fax and mail requirements. Invoice factoring discounting services might demand a notification period, in case one wants to terminate the business. For invoice discounting the fees charged are lesser than invoice factoring because here only finance is offered, because the business takes care of the sales ledger details and other official work.