The client company (again, this is the company that is selling the income of outstanding invoices) is subject to more requirements with invoice discounting than with factoring. Typically the client company will be larger (bringing in a higher yearly income than with factoring) and have to be willing to be audited. It is also important that the client company have a large number of invoices and no one customer responsible for more than 20% of the invoice balance. Diversity is important.

The client company maintains control of the consumer information with closed invoice discounting. This can be good, because the customers will never know that the invoices were sold. The bad side is that the client company will still have to put forth the man hours and effort to collect the debts. The money collected by the client company is deposited into a bank account that is controlled by the invoice buyer. This helps maintain a working honesty between the two companies. Any money that is left over is returned to the client company.

Invoice discounting is not for all companies. The expense of collection still falls on the client company, as does the hassle of making the collections. It does offer cash in advance of collection, and for that reason alone it is sometimes the best option.

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