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Definition
The discount charge in invoice finance is the interest-like cost of the money advanced against your invoices, usually expressed as a margin over a base rate and charged on the funds you have drawn. It is one of the two main costs, alongside the service fee.
In plain terms
Like loan interest, it accrues on the amount and time you are actually funded, so a facility used lightly costs less than one used heavily. Understanding it lets you compare invoice finance against other borrowing on a like-for-like basis.
Why it matters
The discount charge plus the service fee make up the total cost of invoice finance. See service fee and the invoice finance guide.
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Service fee (invoice finance)
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Advance rate
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Prepayment percentage
The prepayment percentage is another name for the advance rate in invoice finance — the proportion of each…
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Balancing charge
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