Difference Between Invoice Discounting And Factoring

[nurrun]

hi,
i have a confusion on invoice discounting and factoring.
what is the difference between this two?

read the difference but still cant understand it.
can someone help to explain the difference?
i have citf exam to attend this oct

thanks in advance.

[CristianD]

Although both operations have the same result, the difference lays in the risks of the creditor
When discounting an invoice , the creditor pay the net value and CAN return the discounted document to debitor if the latter wishes so at the maturity date or there is a default in repayment of the debitor. On the contrary, in the factoring process there is a sale of invoices and the factor cannot return the receivables when the company in debt cannot accomplish their financial obligations.

[victor123]

This is very useful.

[syifabrina]

Hi,

With factoring,the finance company takes over the management of your sales ledger and credit control process. But with invoice discounting you get to manage your own sales ledger and collect payments yourself. Factoring only gives payment up to 85% for a submitted invoice, but with invoice dicounting can give 100% of payment minus a certain percentage of the total outstanding value of invoices.