The best invoice discounting company for your business is one whose offer fits the cash you need, the invoices you hold and the obligations you can manage. Start with comparable written offers. Check the amount available immediately, the total cost at settlement and what happens if the customer payment changes.
This guide explains how to evaluate an offer. If you are still identifying companies and product types, start with our overview of invoice discounting companies in South Africa.
Describe the cash requirement before comparing rates
Write down the expense you need to cover, its due date and the cash already available. For example, a business awaiting a R500,000 customer payment may need only R320,000 now to meet supplier and operating commitments. Compare how each offer meets that immediate requirement and how much of the later payment remains available.
Use the same invoice, customer, expected settlement date and supporting documents for every quotation. If one provider is assessing a single invoice and another is assessing an entire debtor book, record that difference rather than treating the offers as interchangeable.
Compare net cash, not only the advance percentage
Ask for the gross advance and every deduction made before the funds reach the business. An attractive headline percentage may leave less usable cash once upfront charges or reserves are taken into account. Establish whether tax is included in quoted charges and keep the comparison basis consistent.
The following figures are fictional and illustrate the calculation only. They are not Fund The People prices or estimates of market rates.
- Invoice: R500,000, assumed paid in full on the same date for both offers.
- Offer A: R400,000 gross advance, less R10,000 upfront charges, giving R390,000 immediately. A further R15,000 is deducted from the R100,000 reserve at settlement, leaving R85,000.
- Offer B: R375,000 gross advance, less R5,000 upfront charges, giving R370,000 immediately. A further R12,000 is deducted from the R125,000 reserve at settlement, leaving R113,000.
Across both payments, Offer A leaves the business with R475,000 and has R25,000 in total illustrated charges. Offer B leaves R483,000 and has R17,000 in charges. Offer A releases R20,000 more immediately, while Offer B leaves R8,000 more overall. The choice depends on the actual cash gap and the other agreement terms. This simplified example excludes additional charges and tax effects.
Ask what each percentage is calculated on
A percentage of the invoice value is different from the same percentage applied to the advance. A monthly charge is different from a fixed charge for the entire transaction. Request the calculation basis, duration, minimum charge and any setup, administration or collection costs.
Have the provider show the amounts in rand for the expected payment date. Then request the same calculation for a later date. This makes it easier to see how a delay affects the cost and whether a quoted amount is fixed or depends on the time outstanding.
Review customer involvement
Ask who will verify the invoice, contact the customer and receive the payment. Confirm any acknowledgement or revised payment instructions the customer must accept. Keep your accounts team informed so that the business and provider give consistent instructions.
Do not infer confidentiality from the term invoice discounting. FNB’s Selective Invoice Discounting information, for example, requires debtor disclosure. Check the actual arrangement offered to your business.
Understand the consequences of a payment problem
Read the provisions covering a disputed invoice, partial payment, credit note or cancellation. Ask whether the business must repay an advance if the customer does not pay and what security or guarantees support that obligation. Establish the point at which additional costs or recovery action may arise.
Check how responsibilities change if the customer pays the wrong account. Keep a clear process for identifying receipts, notifying the provider and reconciling balances. Ask for a worked settlement statement if the payment flow is unclear.
Separate the decision date from the payment date
Record the steps between an enquiry and available cash. These may include document review, customer verification, offer acceptance and completion of the payment instructions. Ask which step a quoted turnaround measures and which conditions must be satisfied before it begins.
For an urgent supplier obligation, compare the expected date of usable funds with the payment deadline. Confirm who will update you if a required document or debtor confirmation is outstanding. Plan using the stage your application has actually reached.
Assess the ongoing administration
If the business will use the facility repeatedly, ask whether there are minimum volumes, renewal costs, notice periods or exclusivity requirements. Establish how new customers or invoices are approved and how credit notes and disputes must be reported.
Compare service commitments that matter in daily use: a named contact, access to statements, a clear escalation route and a process for closing the facility. Keep those commitments with the commercial terms so that the choice reflects both cost and practical operation.
Use this final offer checklist
- The contracting provider and any intermediary are identified.
- The offer covers the specific invoice or debtor scope you intend to fund.
- The gross advance, deductions, net cash and reserve are clear.
- The total charges and their calculation basis are understood.
- Customer contact, collection and payment instructions are agreed.
- Security, recourse and dispute responsibilities have been reviewed.
- The requirements for releasing funds and settling the facility are documented.
- Any unanswered question has been resolved in writing before acceptance.
Discuss the offer with Fund The People
Fund The People’s Invoice Discounting Solutions are for CSD-registered South African companies with completed, accepted and unpaid invoices tied to qualifying government or municipal tenders. Private corporate invoices are not eligible. The published standard minimum is R250,000, with funding from R250,000 to R8 million or more. There are no assessment fees; proposed funding costs appear in the written offer. Bring the invoice, delivery evidence, payment terms and cash requirement when you contact Fund The People.
If delivery has not yet happened and supplier costs are the immediate concern, ask about our Purchase Order Funding Solutions so that the discussion starts with the right stage of funding.