Invoice Finance Germany- Factoring & Discounting from TFG

2024 Guide | Invoice Finance, Factoring and Discounting

Germany Invoice Finance

Welcome to TFG’s Germany invoice and receivables finance hub. Find out how our team can help your Germany-based company unlock working capital from domestic and international invoices, on both a recourse and non-recourse basis. Alternatively, learn more about the different types of invoice finance: discounting and factoring, through our latest research, information and insights, right here, in our receivables finance hub.

What is invoice finance?

Invoice finance is a common form of business finance where funds are advanced against unpaid invoices prior to customer payment. Invoice finance houses include banks, alternative investment providers and private lenders, used by businesses who trade both domestically and globally. There are two types of invoice financing methods; discounting and factoring.

How can invoice finance benefit my business?

  • The invoice financier will sometimes 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; this can help protect your reputation
  • Invoice finance allows you to maintain a good relationship with your customers, as you can fulfill larger orders on time without worrying about cash flow and working capital problems

Diagram: How invoice finance (receivables purchase) works

Receivables Discounting Diagram

How can we help?

The TFG’s Germany invoice and receivables finance team work with the key decision-makers at 270+ banks, funds and alternative lenders globally, assisting companies in accessing factoring and discounting facilities.

Our team are here to help you scale up to take advantage of both domestic and international opportunities. We have product specialists, from commodities to finished goods.

Often the financing solution that is required can be complicated, and our job is to help you find the appropriate invoice finance solutions for your business.

Read more about Trade Finance Global and our Germany team.

 

Get started – talk to our Germany team



If you have an invoice finance or receivables enquiry, please use the contact form below.

 

Finance Queries:

de.team@tradefinanceglobal.com

trade.team@tradefinanceglobal.com

Partnership Queries:

introducers@tradefinanceglobal.com

Find out more about partnering with us here.

 

Want to learn more about Invoice Finance?

You’ve come to the right place. Here you can find our latest German features, receivables research, and trending articles in the world of invoice finance. Sit back, and catch up with the latest thought leadership and interviews from the region, listen to podcasts and digest the top stories in invoice and receivables finance right below.

From the Editor - Invoice Finance Insights

lendscape fci web featured image VIDEO | Kevin Day on the launch of Lendscape CONNECT Deepesh Patel, Editor, Trade Finance Global, spoke to Kevin Day, CEO, Lendscape, at FCI’s 56th Annual Meeting in Seoul to discuss some of these key trends and ideas. 
fci report featured TL;DR: FCI annual report highlights stable growth and tech innovation in 2023 FCI has released their Annual Review for 2023, highlighting a return to pre-pandemic stability in the global factoring market. 
Factoring and supply chain finance in the shadow of the Areni-1 cave: EBRD's insights from Yerevan Factoring and supply chain finance in the shadow of the Areni-1 cave: EBRD’s insights from Yerevan The EBRD TFP conference gathered industry leaders to discuss evolution of factoring and supply chain finance in emerging markets.

Latest DE Insights

2021 Year in Review 2021 – A Year in Review with Trade Finance Global As the clocks struck midnight, we looked back at over 700 articles, handpicking our favourite stories that made the headlines in 2021
Short-term, self-liquidating, is trade finance as an asset class on the up FCI reports 6.6% drop in global factoring statistics in 2020 The first estimates for the factoring industry worldwide in 2020 have been announced today by the FCI’s Peter Mulroy. Factoring declines were recorded in most regions except Asia Pacific.
Aysen Cetintas Using education to make factoring more inclusive Teaching businesses to unlock working capital and grow their operations through factoring education programmes (FCI)
FCI insights Podcast: FCI – Views from the Board, Factoring and Receivables TFG’s Deepesh Patel caught up with FCI’s Chairman, Mr. Patrick de Villepin, and FCI Vice Chairman, Mrs. Daniela Bonzanini, on the critical role of Receivables finance industry in the recovery of global trade growth during this challenging period.
Eurozone factoring NEWS: Factoring and Commercial Finance continues to be a low loss given default with 7.9% YoY Growth The most recent version of the EU Federation (EUF’s) Industry Standard Whitepaper has been recently updated and published with the finalised market data for 2018
Eurozone factoring NEWS: EU Factoring and Commercial Finance grows 7.9% in 2018 Final analysis of data collated by the EU Federation for the Factoring and Commercial Finance Industry (EUF) shows that in 2018 factoring and commercial finance volumes in the EU grew overall by 7.9% to €1.73 Trillion, 80% of which was domestic business and 20% international.

Videos - Invoice and Receivables Finance

Hub Articles

How to use Invoice Financing for your Small Business

Invoice factoring for small businesses is fairly straightforward. As an example, an end customer might not pay the £100,000 invoice issued to them for up to 90 days, but your company needs the funds in 2 weeks, in order to pay for business expenses and salaries.

Read more →

How to use Invoice Financing for your Small Business

Why should I compare invoice factoring or invoice discounting providers?

There are several bank and non-bank providers of invoice finance, from large instutions to small alternative funders, each offering different propositions and solutions for customers.

Read more →

What is the difference between invoice factoring and invoice discounting?

Invoice factoring and invoice discounting are both types of asset backed finance aimed to help businesses release cash which are tied in invoices.

Read more →

What is the difference between recourse factoring and non recourse factoring?

The industry defines the two forms of factoring by risk. Invoice finance is effectively a line of credit obtained on the value of your outstanding sales ledger. Here’s what happens if your debtors fail to pay the invoices after you have financed them.

Read more →

What is bill discounting and how does it differ from factoring?

Bill discounting, also known as purchase of bills and invoice discounting are all the same type of financial instrument used to provide working capital to small and medium enterprises from invoices raised.

Read more →

Invoice Finance - Frequently Asked Questions

What's the difference between invoice discounting and invoice factoring?

Invoice finance is a type of receivables finance, which includes factoring and discounting.

Factoring is present when a business assigns their invoices to a third party and the factoring company has full visibility of the sales ledger and will collect the debts when due.

  • The customer has knowledge that the invoices have been factored. (This is the typical route a lot of funders offer, however – some can offer Confidential Factoring)
  • Factoring gives businesses up to 90% pre-payment against submitted invoices
  • This enables improved cashflow, and reduces the need to wait for payment
  • The company may receive their funds up to two days after invoices are sent out. Many factoring companies will offer to send money same day (TT Payment, usually carries a charge) or by BACS (Free)
  • A business can choose a ‘selective’ factoring or invoice discounting facility, dependent on the funder.

Typically, with Invoice Discounting, the borrower will have more control over their ledger. Again – like factoring, there is the option to do this on a completely confidential basis.

  • Invoice discounting is an alternative way of drawing money against the invoices of a business
  • The business retains control over the administration of their sales ledger
  • Invoice discounting usually involves a company reconciling with their invoice financier monthly
  • With factoring – each individual invoice is uploaded – with Invoice Discounting, a bulk figure is uploaded and then drawn down against with the monthly reconciliations showing where money is allotted to
  • Under a selective facility a business can opt to factor (i.e. lend) or invoice discount just some of the submitted invoices
  • A selective facility is a good option if a business needs a certain amount of cashflow guaranteed each month or if one or two customers are good payers.

The main difference between factoring and invoice discounting is that with factoring, a funder will have full visibility of your sales ledger and maintain this by chasing debts on your behalf. Invoice discounting on the other hand, allows you to keep your credit control in house but as we already discussed, it would require a monthly reconciliation with the invoice financier. Naturally, management fees for invoice discounting are usually a lot lower, however a company must demonstrate they have the correct procedures in place to support an Invoice Discounting facility.

What is factoring?

Factoring solutions offer the seller of a receivable a wider service than just the advance of funds to shorten its cash conversion cycle as the entity buying the receivable will also usually take on the responsibility of collecting the debt.

Factoring can take several forms. For example, a factor may agree, subject to limits, to buy the whole of a seller’s receivables. This is known as whole turn-over factoring. Conversely, a factor may select which invoices he wishes to buy. It can be with or without recourse to the seller and may or may not be notified to the buyer or obligor.

The vast majority of factoring is domestic and individual invoices are often of a low value. Cross-border factoring is possible using the two-factor system. One factor is in the buyer’s country (known as the ‘Import Factor’) and the other in the seller’s country (known as the ‘Export Factor’). The two Factors establish a contractual or correspondent relationship to service the buyer and the seller respectively under which the Import Factor in effect, guarantees the receipt of funds from the importer and remits payment to the Export Factor. Typically, the two factors use an established framework such as the General Rules for International Factoring (GRIF), provided by FCI. Read more about factoring here.

What is invoice discounting?

Invoice discounting solutions tend to focus on shortening a seller’s cash conversion cycle, as opposed to encompassing debt management and collection aspects. The degree of disclosure to the debtor under this type of facility varies, ranging from full disclosure to no-disclosure, depending on the level of comfort taken by the purchaser of the receivables over the nature and standing of the seller. In most cases, the greater the control the financing entity/purchaser of the receivables manages to attain over the process, the better the discounting conditions offered.

An invoice discounting facility without disclosure to the debtor will grant the seller of the receivables full confidentiality, and therefore avoid reputational hazards. Most invoice discounting is without recourse to the seller so as to ensure de-recognition of the receivables from the seller’s balance sheet (so-called “true sale”) but recourse is normally retained for commercial dispute e.g. where the buyer refuses to pay because the goods or service are defective. Read more about invoice discounting here.

Strategic Partners:

Get in touch with our Germany Invoice Finance team

Speak to our trade finance team

Quick Links

Download our free invoice and receivables finance guide



Latest Germany feature from Trade Finance Talks

Our Germany factoring and invoice finance partner

Latest Germany News

21Dec

Video | ITFA Christmas Party: Unwrapping the EU Late Payments Regulation

0 Comments

Businesses and public authorities across the EU may be facing tougher laws on late payments, with the European Commission proposing… Read More →

19Dec

Transparency International highlights need for EU-wide beneficial ownership rules

0 Comments

One year after an EU court ruling on beneficial ownership registers left civil society and journalists in 13 countries encountering… Read More →

18Dec

Out of scope: How ESG will shake up global trade

0 Comments

Alex Gray, Director of Trade and Transaction Banking at the London Institute of Banking & Finance, outlines why the drive… Read More →

24Nov

COP28: Germany and Chile to form climate club to enhance green transition in developing countries

0 Comments

Germany and Chile are set to establish a coalition of governments at the COP28 climate summit next week, aiming to… Read More →

28Sep

Report: ICC Germany highlights digital solutions to combat trade fraud

0 Comments

The German branch of the International Chamber of Commerce, ICC Germany, in collaboration with financial technology firm MonetaGo, has released… Read More →

24Aug

Global trade in Q2 2023: OECD report highlights shifts and challenges

0 Comments

Today, the OECD released their International Trade Statistics report for Q2 2023. The report offers an insight into the global… Read More →

18Aug

US imposes duties on Canadian, German and Chinese steel

0 Comments

The U.S. Commerce Department announced on Thursday its intention to apply preliminary anti-dumping duties to tin-plated steel imports from Canada,… Read More →

07Aug

German industrial production falls in June

0 Comments

German industrial production declined more sharply than anticipated in June, data released on Monday revealed, highlighting the difficulties encountered by… Read More →

01Aug

EU growth higher than expected in Q2

0 Comments

The eurozone witnessed a return to growth during the second quarter of 2023, recording an expansion that surpassed expectations, having… Read More →

23May

The growing legal imperative for human rights due diligence

0 Comments

Economically disadvantaged people have been trafficked into countries as sources of “cheap” labour throughout history. The International Labour Organization… Read More →

11Apr

EU Federation & FCI join forces to promote the factoring and commercial finance industry in Europe

0 Comments

The 8th EU Federation (EUF) & FCI EU Factoring Summit will take place on 20-21 April 2023 in Cologne, Germany…. Read More →

20Dec

Tradetech and deep tier financing: How emerging technology can help supply chains meet ESG standards

0 Comments

Alex Gray, head of trade finance at The London Institute of Banking & Finance, explains why the staff at trade… Read More →

16Dec

Q&A | CBI’s Liliana Fratini Passi on innovation in the banking sector

0 Comments

In light of the current landscape, Trade Finance Global (TFG) were delighted to have the opportunity to speak with Liliana… Read More →

05Dec

Trafigura signs $3bn loan agreement guaranteed by Germany to secure gas supply

0 Comments

Trafigura, a market player in the global commodities industry, has entered into a $3 billion four-year loan jointly arranged and… Read More →

14Nov

Auf wiedersehen fossil fuels: Germany’s route towards LNG adoption

0 Comments

In a bid to diversify energy sources and become more eco-friendly, Germany has enacted a grand push toward natural gas. … Read More →

07Nov

Commerzbank on standardisation: the key to sustainable trade finance

0 Comments

The world of trade is changing. Increasingly, the topic of environmental responsibility is taking centre stage, with discourse specifically circling… Read More →

17Aug

The acceleration towards green and renewable energy through cutting ties with Russian gas

0 Comments

Conflict with Russia has created a multitude of substantial repercussions for economies around the world, not least an ongoing disruption… Read More →

20Jul

Debt utilisation in European SMEs

0 Comments

Trade Finance Global (TFG) surveyed firms throughout Europe to gain an understanding of SMEs’ trade finance usage norms and their… Read More →

Visit our Global Hubs

TFG in Translation

About the Author

Sheena is responsible for the TFG Weekly Trade Briefings at Trade Finance Global (TFG).

She loves the digitalisation of trade and is fascinated about its impact on day to day transactions.

Back to Top