how invoice financing is structured
invoice financing can be structured in a number of ways most commonly via factoring or discounting with invoice factoring the company sells its outstanding invoices to a lender who might pay the company 70 to 85 up front of what the invoices are ultimately worth assuming the lender receives full payment for the invoices it will then remit the remaining 15 to 30 of the invoice amounts to the business and the business will pay interest and or fees for the service since the lender collects payments from the customers the customers will be aware of this arrangement which might reflect poorly on the business as an alternative a business could use invoice discounting which is similar to invoice factoring except that the business not the lender collects payments from customers so customers are not aware of the arrangement with invoice discounting the lender will advance the business up to 95 of the invoice amount when clients pay their invoices the business repays the lender minus a fee or interest 