Invoice Discounting

Invoice discounting is a financial arrangement where a business receives an advance on its outstanding invoices instead of waiting for customers to pay. Essentially, a company sells its invoices to a financial institution at a discount, gaining immediate cash flow to cover expenses or invest in growth. The business still manages the payment collection from customers. Once customers pay the invoices, the financial institution receives the payment, and the business pays back the advance, minus any fees. This helps maintain liquidity without taking on debt or giving up equity.