Help please from the City Slickers

[Snoggledog]

Need a bit of help if possible. Could someone tell me all about factoring and discounting, who manages the systems, what it is, how it operates etc? I've had a look at wikipedia and think I have an idea but need a slightly more in depth view (hopefully hands on from some of you)

Thanks.

[audidoody]

Factoring:

You give the bank your sales ledger. They give you a proportion of the total due up front and send out invoices to collect the rest. They claw back from you money for any invoices they can't collect after 90 days.

Discounting

You run your own sales ledge and do your own credit control The bank gives you a chunk of what's due up front. You pay receipts from your creditors into a trust account owned by the bank.

Both are very expensive fees and interest and come with onerous conditions. Try to avoid.

[Snoggledog]

I'm going for an interview with a company that has a lot to do with factoring /discounting software hence my question.

From what I've read so far I can understand why you say 'avoid' from a finance point of view but as it's a job I'm keen to understand as much as possible.

Edited by Snoggledog on Friday 17th July 16:31