Invoice discounting for businesses that retain credit control
Why established businesses choose discounting
Confidentiality
Under normal operation, your customers pay into an account in your name without receiving third-party assignment notices.
Retain relationships
You continue to manage all credit control, ensuring sensitive client relationships are handled your way.
Ledger-linked funding
Availability may increase as the eligible ledger grows, subject to the agreed facility limit, reserves and provider review.
How availability changes with your ledger
Unlike a traditional term loan, an invoice discounting facility is linked to your sales ledger. Your available funds recalculate based on your eligible outstanding invoices and agreed reserves.
Lenders calculate availability by taking your total ledger and stripping out "ineligible" debt. This usually includes:
- Old debt: Invoices unpaid beyond the agreed funding period (typically 90 days past the invoice date).
- Concentration limits: Amounts owed by a single customer that exceed their agreed percentage cap (e.g., if one customer owes 40% of the ledger but is capped at 20%).
- Contra accounts: Invoices to a company that is also your supplier (since they might offset what they owe against what you owe).
The agreed advance rate (often between 70% and 90%) is only applied to the remaining eligible ledger.
Example availability calculation (Concentration & Dilution)
How a £500,000 ledger translates to actual cash availability.
For illustration only. Exact advances, fees, and reserves depend on your provider, sector, and debtor quality.
Confidential and disclosed discounting
Confidential Invoice Discounting (CID): A common form for established businesses. You retain credit control, and under normal operation, customers are not notified. Providers typically look for an established turnover (often £500k+) and evidence of a strong internal finance team.
Disclosed Invoice Discounting: If you don't meet the criteria for a confidential facility, a lender may offer a disclosed facility. You still manage the credit control yourself, but your invoices must state that the debt has been assigned to the lender. This is often a stepping stone for businesses outgrowing factoring but not yet ready for CID.
Advantages and limitations
Strict eligibility criteria
Providers require clean financial systems, low credit notes, and proven historical credit control performance.
Audit burden
Lenders will regularly audit your sales ledger, cashbook, and processes to ensure compliance.
Not a fix for bad debts
If your customers are consistently late or failing to pay, discounting will not solve the underlying issue. The risk remains with you.
Minimum usage fees
Facilities usually carry minimum annual service fees, making them expensive if your borrowing needs suddenly drop.
Month-end reporting checklist
- Full aged debtor report matching the general ledger.
- Cashbook reconciliation showing all customer receipts.
- Credit note analysis to monitor dilution risks.
- Updated customer credit limits and any requests for concentration limit increases.
Who you could speak to
- STEP 1
A conversation with a broker
You talk to a real Sorbus broker about the business, the purpose and what is affordable. No application at this stage.
- STEP 2
Credit placement
If you choose to go further, we prepare the case and decide which lenders on our panel of 150+ are worth approaching.
- STEP 3
Lender assessment
The lender, not Sorbus, underwrites and makes the credit decision. Approval is never guaranteed.
- STEP 4
Documentation
If a lender offers terms and you accept, we help coordinate agreements and payout paperwork with you.
Every step after the first is optional. You can stop after the conversation. Sorbus is a broker, not a lender.
Client journey
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Email us anytime
hello@sorbusfinance.co.ukIn almost all circumstances we do not charge a broker fee. Should a broker fee be chargeable you will be made aware clearly in advance and it will be agreed in writing before you proceed. Read our Initial Disclosure.
Sorbus Finance acts as a credit broker/introducer, not a lender. We can introduce you to lenders on our selected panel and do not search the whole market. We do not provide advice or a recommendation. Lenders determine eligibility, pricing and final terms. We may receive commission from a lender; the amount and method can vary and may affect what you pay. Read our Commission Disclosure and Complaints Procedure.
Frequently asked questions
Common questions from UK businesses about invoice discounting.
Ready to discuss your requirements?
Speak to a Sorbus Finance specialist about a suitable invoice discounting structure for your business. Free, no-obligation comparison across lenders on our selected panel.