Invoice Finance | TFG Deutschland

Invoice Finance, Factoring and Discounting Explained

Invoice Finance | The 2016 Guide

Invoice finance, also known as export factoring in Germany, is very common when trading goods and services domestically and globally.

Invoice finance allows sellers and exporters to trade on open accounts with clients, and can reduce cash flow problems within a business as cash from the invoices is released quickly. Invoices act as security or as a guarantee for a loan, or can be sold in advance to a third party who will subsequently take the payment off the clients.

Last year alone, over US $3 trillion was traded through export factoring and invoice financing, it is an industry which has been growing in many sectors for the past 5 years.

Invoice Discounting

Invoice discounting is the process whereby a lender will issue a business loan which is secured against a single invoice or the entire loan book of a company and charge the company interest as well as fees.

Invoice Discounting


In contrast to invoice discounting, invoice factoring occurs when an invoice or an entire loan book is sold at a reduced rate to a factor, which allows the customer to settle payments with the third party.


What does Invoice Finance Include?

Invoice finance includes any transaction, be that a cross-border or local transaction, which involves you invoicing a customer / end buyer which might not be paid for 30-180 days. Invoice finance offers a solution which allows for the value of the invoice to be paid upfront, less fees, which allows a company working capital to produce the product and send it to the customer.

  • The invoice financier will take on the responsibility to look after your sales ledger which means the business owner can have more time to focus on the business
  • An invoice financier will conduct due diligence (including credit checks) on customers, which reduces the risk of not receiving funding
  • Invoice discounting can be done on a confidential arrangement, which means that your customers will not know that you’re using a finance house independently, which can help maintain your reputation
  • Invoice finance allows you to maintain a good relationship with your customers, as you can fulfil larger orders on time without worrying about cash flow and working capital problems
  • Importers
  • Exporters
  • Invoice finance specialists
  • Independent and alternative financiers
  • Corporate Banks
  • Other Service Providers (private funders)

Video: An Introduction to Invoice Finance

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