Credit control methods

Question 1

Invoice discounting

Answer 1

1)This is a sale of a business’ invoices to an invoice discounting company( purchase of invoices from a company)
the discounting company doesn’t take over the collection of the debts
2) Method of raising cash : The cash is received On the invoice is as it is raised rather than waiting for the customer to pay

Question 2

Advantages of invoice discounting

Answer 2

1) Simple and flexible
2) Can be used when short term funds are needed - improving liquidity
3) The Customer does not need to know of the invoice discounting arrangement
4) The business receives cash sooner