Unsurprisingly confidential invoice discounting (CID) is exactly the same as invoice discounting except it's confidential!

This means that you have no legal obligation to inform your customers that the debt has been assigned to a third party. Confidential invoice discounting offers a cost effective way to gain access to the money tied up in un-paid invoices. As a result it is a viable option to smooth out cash flow problems or fund internal growth and development. After assessing your business the confidential invoice discounting company will advance you a percentage of the total outstanding sales ledger, typically up to 85%. In return you will pay a monthly fee as well as interest charges on the money advanced. Customers continue to pay you direct and are completely unaware of the arrangement you have with the CID provider. Because you are paying interest on the advanced funds you remain committed to getting your outstanding invoices paid as quickly as possible.

Invoice discounting is usually only available to larger businesses with an annual turnover of over £500,000. They must be involved in selling products or services on credit to other businesses and have a proven track record. In addition you will have to prove that your business has a robust credit control system.

CID also offers protection against bad debt but this is dependant on the finance company involved and their assessment of your customers.

Ideal for:
Proven businesses with a significant annual turnover that want quick access to money tied up in outstanding invoices but do not wish their customers to know that a 3rd party is involved.

Security required:
Invoice discounting is secured against the sales ledger. Occasionally personal guarantees for a portion of the funds advanced may be required from the director of a limited company.

Advantages:

• You get immediate access to money tied up in outstanding invoices to help smooth out cash flow or fund development.
• You maintain control over your sales ledger.
• You remain in control of customer relationships.
• Your customers don't know about the relationship you have with the invoice discounting service.
• Limited need for personal security from the business owner.
• In the future confidential invoice discounting may prove cheaper than conventional debt.