How much does invoice discounting cost?
According to the current scenario, the cost of discounting the invoice is very low. It takes only 0.2% to 0.5% of the total turnover fee. This is lower than the invoice factoring. You can easily apply and avail of funds. The finance company is not responsible for collecting payments from your customers like other invoice products. Thus, the borrowing procedure is neither expensive nor slow. However, it is essential to mention that your business should have stable finances.
This type of invoice finance is the cheapest and the fastest way to obtain funds. This is why several business owners consider it more important than small business loans. You should know that the discounting fee is charged weekly or monthly. The purpose of the fee is to release the cash. For longer repayment terms, you may need to pay a higher fee. On the other hand, for a shorter repayment term, a lower fee is fine.
In any case, discounting is cheaper than invoice factoring. After all, the lender has fewer responsibilities to manage. It is always best to hire a finance broker and let it help you choose from a choice of lenders. The brokers know the nerve of the market and they will not let you get lost in the oceanic quantity of the options.