How invoice discounting differs from factoring

Invoice Discounting offers the real cash flow benefits that factoring offers but without the need to lose control of your sales ledger and existing methods of credit control. It is usually (but not in every case) a confidential service (known as "C.I.D" - Confidential Invoice Discounting or "D.I.D."- Disclosed Invoice Discounting).
Factoring companies usually look for well-established profitable businesses with an effective and professional sales ledger administration system, before they are prepared to offer this form of facility. Generally turnover needs to be running at over £500k (and with many factors £1m) to qualify.
Service charges (often known as "commission charges") are usually much lower than for factoring for the obvious reason that the sales ledger administration is still your responsibility.
Discount Charges vary from case to case but are usually between 1.25% and 3% over base rate. Often a discounter will try to match or beat the rate currently being charged by the client's bankers.
This method of finance is becoming an increasingly popular method of financing mergers and acquisitions, MBOs and MBIs.
As mentioned earlier, Invoice Discounting is becoming increasingly used alongside stock finance, term loans and trade finance to offer a full asset based lending package. Many providers of invoice/receivables finance have brought a new, dynamic and creative set of solutions to age old problems - often with very attractive cost structures.