Invoice discounting

Invoice discounting is used by some businesses as a way of raising working capital. It involves the purchase (by the provider of the invoice discounting service) of trade debtors at a discount to their book value. Invoice discounting enables the business from which the debts are purchased to raise working capital by swapping trade debtors into cash. (See also invoice factoring).

 

reference: Business Studies / Accounting. Accounts & Finance Glossary. Jim Riley BA(Hons) MBA FCA // tutor2u

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