What is invoice discounting, and what do I still owe if my anchor does not pay?

What it is

You have delivered, you have invoiced, and your anchor has approved the invoice. Invoice discounting lets you offer that approved invoice to a financier and be paid its value less a discount, before the due date. You choose which invoices and when; offering one does not commit the next.

How it moves

You deliver the goods and invoice your anchor. Your anchor approves the invoice, only an approved invoice can be offered. You choose to offer it and assign it to the financier. The financier pays you the invoice value less the discount. On the due date your anchor pays the invoice in the normal flow and that payment is routed to the financier. The diagram below draws the same steps.

Full recourse, in plain words

Under the documented terms, invoice discounting is with full recourse: if your anchor does not pay in full, or the amount collectible is reduced, you buy the invoice back or pay the shortfall on demand, together with the discount charges that have accrued.

So the early payment is not the end of your exposure to that invoice. Until your anchor has paid, the risk that it does not stays with you. Decide knowing that, and do not offer an invoice you expect to be disputed.

The letter of undertaking

Your anchor signs a letter of undertaking. Under the documented terms it routes the payment to the financier; it is not a guarantee, and it does not move the obligation to repay off you. Your anchor’s own obligation to pay arises only from goods delivered and accepted under your contract, and for this product only once it has confirmed the invoice.

What it costs

A discount on the invoice value. Under the documented terms you see the product, the amount payable to you, every deduction (financier discount, platform fee, VAT) and the effective annualized cost before you accept, on each invoice you choose. You can always decline and wait for the full amount.

Is it a loan, and does it touch my CRB record?

Do not take a one-line answer. Whether your program documents this as a purchase of your invoice or as a secured advance is a term of your financier’s own agreement, and with full recourse the question is a real one. Ask for the clause, not a summary. Whether anything is reported to a credit reference bureau likewise depends on how your financier documents your program: ask before you draw. The supply-side FAQ carries the approved answers to both.