Invoice Discounting
Invoice discounting is a form of receivables finance in which a business borrows against its unpaid invoices while keeping control of its own sales ledger and collections. Unlike factoring, it is usually confidential, so the business's customers are not told a financier is involved and continue paying the business directly.
Invoice discounting versus factoring
The line between invoice discounting and invoice factoring is who collects and whether the customer knows. In factoring, the factor takes over collections and the account debtor is notified, often via a notice of assignment. In invoice discounting, the business keeps collections and the facility is usually confidential.
How pricing and advances work
The financier advances a percentage of eligible invoices and holds the rest as a reserve until collection. Because it does not control collections, the financier watches ledger quality closely, and high dilution can reduce advances. Zolvo automates the reconciliation, verification, and dilution monitoring behind receivables finance facilities.