Invoice Discounting
Definition
Borrowing against the value of outstanding invoices while the business keeps control of its own collections, unlike factoring. It releases cash tied up in receivables.
Related Terms in Invoicing & Sales
Payment Terms
The conditions on which a seller expects payment, such as net 30, net 60 or due on receipt, sometimes with early-payment discounts. Clear terms set expectations and support collections.
Net 30
A payment term meaning the full invoice amount is due within 30 days of the invoice date. Net 15 and net 60 work the same way with different windows.
2/10 Net 30
A payment term offering a 2% discount if the invoice is paid within 10 days, with the full amount otherwise due in 30 days. It rewards customers for paying early and speeds up cash collection.
Early Payment Discount
A reduction a seller offers to encourage customers to pay before the due date. It improves cash flow for the seller at the cost of a small margin, and lowers the cost of goods for prompt buyers.
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