Invoicing Discounting costs

Please explain in detail the total cost for the facility?

The Invoice Discounting costs are client specific and is determined based on the diligence/risk profile of each business we engage with. The fee is negotiated upfront and forms part of the client contract. It is calculated as a once off fee per invoice discounted.
There are no hidden or additional costs.

Is Factoring or Invoice Discounting cheaper than an overdraft facility?

Invoice Discounting has a number of benefits compared to an overdraft facility. It is a competitive pricing considering the value adds, but it also generates about twice as much cash as a bank overdraft facility. Furthermore, no personal security is required and given that it is for a fixed term there are no fluctuating costs or the need to go back to the bank and ask for more cash.

Do you take over the debt?

No, we don’t take over the debt but rather, through a dedicated credit controller per client, who builds strong relationships with your debtors – the process of debt collection is well managed. We practice a proactive collections methodology to effectively collect your debt, ensuring positive cash flow for our clients.

Do you use our credit terms or apply your own?

We will use the credit terms you have in place with your clients, unless otherwise requested.

Invoice Discounting explained

What is Invoice Discounting?

It’s a process whereby businesses can convert existing sales invoices into instant cash as opposed to waiting 60 or 90 days to get paid. The process is very simple, you make the sales, deliver the goods or service, upload the invoice and proof of delivery to Transaction Capital Business Solutions and we will automatically pay you an advance of up to 75% of the invoice value less our minimal fee. The 25% balance gets paid back to you once we collect the invoice.

What is the difference between Invoice Factoring and Discounting?

The fundamental difference is in the pricing structure. Invoice Discounting is the simplest method to apply for as it has a fixed fee with no additional upfront charges – allowing you to budget and cost accordingly. Where factoring, on the other hand, has a complicated costing structure which makes it exceptionally difficult to budget and pass on costs to your clients.

How does it work?

How do you collect my debt?

We have a dedicated credit control team that builds great relationships with your debtors. Through our proactive collections methodology, we ensure that we actively collect debt through careful follow up and a consistent approach to managing collections.

Can selective invoices be discounted or do I need to discount all my invoices?

No, you don’t have to convert all your invoices. You choose which invoices to advance cash against as and when you have a cash flow requirement. Transaction Capital Business Solutions will then, as a value-add, still collect your entire debtor’s book irrespective of which invoices you have converted.

I like the funding but am not prepared for a 3rd party to contact my clients. Can't I do my own collections and my clients pay to you?

We have world class credit controllers and cutting edge technology which enables and facilitates a win-win situation for all stakeholders concerned. As such, using our services entails us managing your collections from beginning to end – to ensure a comprehensive, well managed process.

How can I keep up with daily changes on my sales ledger?

Our unique, cutting edge web based facility allows you full line of site at any time to view your age analysis, credit control comments and the ability to discount invoices online. All invoices can be loaded online and all details pertaining to your ledger can be accessed daily.

What type of business can make use of your services?

All businesses that supply business to business credit on terms can benefit from an invoice discounting facility – improving cash flow and business growth.

How we work with your business

Why must my debtors pay Transaction Capital Business Solutions?

Transaction Capital Business Solutions is paid by debtors to ensure that the full process is managed for our clients from end-to-end – ensuring the correct amounts are paid and that fees owing to the client can be paid effectively each month.

Why do you collect outstanding invoices?

Outstanding invoices are collected on your behalf to aid your business not only in collecting debt but, very importantly, to improve your access to working capital for business growth and continuity.

I understand that brokers are linked to certain funders. Is Transaction Capital Business Solutions truly independent and impartial?

Transaction Capital Business Solutions is an independent FSP, under the Transaction Capital business entity. Therefore, we operate directly with our clients through our sales and debtor teams.

What guarantee do I have that you will collect all my debtors?

You would sign a contract with Transaction Capital Business Solutions that outlines the terms of the arrangement including, service levels, costs, and other related aspects. Therefore, as a professional FSP, we are mandated to adhere to all policies, contracts and procedures – of which the collection of your debtors forms our core business focus.

Am I not “giving” my business away by allowing Transaction Capital Business Solutions to control my money?

Certainly not. Transaction Capital Business Solutions deals solely with the credit controller at your client’s offices and is not involved in any day-to-day interaction with your main contact – leaving you in control of the strategic business relationship.

What about my relationship with my clients?

You never lose control of the relationship with your client. Transaction Capital Business Solutions simply liaises with the person at your client who makes creditor payments.

Is your facility not admin intensive?

There is very little admin involved within our process as a result of the full management of your book by our experts, as well as a result of our online platform that allows easy access to all your debtor related information.

What are the benefits to my business of using Invoice Discounting?

  • Uncapped consistent cash flow, as your sales grow so does your access to instant cash
  • Ability to provide greater credit terms to clients
  • Upfront capital enables you to secure early settlement discounts from suppliers to offset costs and boost profits
  • By outsourcing credit collections, you free up resources that can be deployed in other areas of your business to enhance overall efficiency
  • Business or personal assets are not required as security if you have a spread debtor’s book in good standing and it does not exceed your creditor exposures, the business is liquid and makes acceptable GPs
  • Allowing for flexible borrowing: you decide what your working requirement will be at any given time
  • We are big enough to fund your requirements, yet small enough to care about individual client needs – focused towards a flat management structure.

Credit worthiness

Does my business need good credit record?

No, invoice discounting is available to all businesses that have a spread debtor’s book in good standing and one that does not exceed your creditor exposures, the business must be liquid and should make acceptable gross profits.

As such, it is not necessarily linked to credit ratings.

Isn’t this facility just for failing companies?

Definitely not, this facility is used by many major industry players as a means to create access to funds that are simply not available at the time and to improve working capital. As such, this type of facility is available to businesses that need room for growth, businesses that don’t have the resources to manage their book and collect effectively, struggling businesses, and simply those that need extra access to funds.

Will my bigger corporate clients not think I am in trouble by using your services?

To the contrary, Invoice Discounting is used by many large companies to improve cash flow, support growth, and increase profits. Many of your customers may use the service themselves; globally it’s the fastest growing funding instrument to boost cash flow.

Do you use your own credit terms or mine?

We would use your existing credit terms which you have agreed with your customers.