Confidential Invoice Discounting – CID Facility Explained.
Confidential Invoice Discounting or a CID Facility as sometimes it is referred to is product is designed for businesses who offer trade terms to their customers. The Invoice Discounting provider will advance your business money against the companies unpaid customer invoices. The word “Confidential’ gives a clue to the facility offered. Unlike Invoice Factoring your clients are unaware that you are using a CID Facility, as they pay in to a client account and your business retains its ability to keep the credit control function within your credit control team.
Confidential Invoice Discounting Is It Right For My Business
Invoice Discounting finance products are designed for companies who offer trade terms to their customers but want to remain confidential. Your company needs to be well established with a great credit collections team in place as the discounter has less direct involvement over how you collect your debts.
The lender will want to see an exceptional audit report of past collections. Security for the lend is usually placed on the invoices so a debenture is placed on the Limited Company.
How Much Does A CID Facility Cost?
Because you employ your own credit collections team with total control over your debtors, invoice discounting can be a very cost effective way of funding your business. The cost of money drawn against your sales ledger would be charged at between 1.5-2% + bank base rate, in addition you would pay a small administration charge of around 0.1%, subject to a minimum charge of £5000 per annum.
A few benefits with confidential invoice discounting, apart from the immediate cash flow boost, is the ability to retain the credit control function within your organisation. However, because of this the funding provider will offer a lesser percentage of cash upfront say 80% instead of 95% compared to invoice factoring. This is down to the discounting provider is at a greater risk due to not having control of the collections or making contact with your clients.
A quick review of Confidential Discounting:
- You are responsible for chasing your unpaid invoices yourself
- Your outstanding invoices are sold to the discounting provider
- The facility is confidential, so your customers won’t know you’ve financed the invoices
- The Confidential discounting provider may insist on credit insurance to minimise your exposure should a debtor fail
- If your customer is late paying it won’t affect your cash flow
- Your customer would normally pay into a “client account” controlled by the lender
Confidential Invoice Discounting Providers
Who is the best confidential discounting provider? a question we are often asked. The is no simple answer to this question, all discounters are different, offering companies different funding solutions.
As with any important business decision a full investigation in to different companies is needed. Special attention should be paid to their terms and conditions should you be considering finance.
The are over 40 providers in the market in the UK today. Most high street bank lenders have left and be replaced by bespoke funders that have a large appetite to do deals. With this in mind terms are getting shorts and cost of borrowing is getting lower.
Why Obtain A CID Facility?
Cash is King
If you are a B2B company that invoices in arrears, then receiving advanced funds against unpaid invoices can help your business cover costs. This will help your business to keep its daily operations running. Depending on the businesses financial circumstances and its objectives, this advance cash flow injection could also be used to expansion and growth the venture.
Debtors’ payment schedules can easily sink a company if not kept in check! you could end up waiting 30, 60, 90 or even 120 days for payment. A Confidential Invoice Discounting facility will ensure that the business is paid for products or services supplied in advance. The funds against and invoice is available within 24 hours of the business issuing that invoice.
A Confidential Invoice Discounting facility suits businesses that have the resources to retain credit control, as they are in charge of their own sales ledger.
As a Confidential Invoice Discounting facility is funded against a business’s sales ledger, the funding received by the business can expand as its sales grow.
Where can you find the Confidential Deal?
There are many different factors to consider when you need to select an invoice finance provider. Invoice Funding are market leading experts at sourcing a confidential facility which best suits your needs. This my be cost sensitive, a focus placed on service, or both. We work with over 40 lenders across the UK. As we have secured favourable rates which is passed on to you we are confident we can find you the best confidential discounting deal.
Benefits Of Dealing With A Discounting Broker
One of the best benefits of dealing with an independent invoice discounting broker is that they can source you a great deal. this will save you time and ensure you get the right deal. If the deal is stacked correctly then it will be painless and cost effective for your business. if you feel you could use a CID Facility for your business simply complete the online enquiry form.