Confidential Invoice discounting or CID

Confidential invoice discounting is a new thing whereby the funding is given to you against your outstanding sales invoices but the reason it is called as the confidential invoice discounting is that you only collect the invoices which will mean you’re your debtors do not even get to know that you have been using the outstanding sales invoices as a funding thing.  

Now the benefit from this form of discounting known as confidential invoice discounting is that you will be able to get good advantage from the locked in money in the outstanding sales invoices. That way your working capital will be available to you and you will be relieved to not go in for any other form of financing and the working capital loans. That said the other reason why the confidential invoice discounting is a must is that it will help to ensure that you are still the owner of the entire ledger and it will be you who will be going after the debtors for the payments. The financing for the discounting company does not become involved in any of the services like chasing your debtors and they always remain in the background.

 And the answer to this is not very simple. The total cash that you can generally raise from the confidential invoice discounting is about 90% of your entire outstanding sale invoices. Now this figure can be higher or a bit lower based on the fact on how much business you are doing with the discounting firm.  

Invoice discounting vs. the confidential invoice discounting is that in the confidential discounting the entire risk of you not following up with your debtors is borne by the discounting firm and that will mean that there is an additional administrative fee that the firm charges because in w ay they are managing the risk of not being directly involved with the invoices and the sale ledger.  

This is a core difference between the normal invoice discounting and the invoice discounting with the main risk being borne by the finance company versus they being directly involved in getting in tough with the outstanding debtors and then making sure that they pay. The benefit from the invoice discounting is that you will be free from the headache of using the sales force to recover bad debts and it is definitely a huge cost  

Confidential invoice discounting is not available to all the firms and is generally available to mid size companies and based on the volume the rates will vary.  

Now do not think since that you have received huge cash because of cash flow discounting that you should get complacent about money. On the contrary you should actually now become more conscious about the extra cost and should work towards effectively reducing the overall costs and having a better cash flow management.