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What are the disadvantages of using Invoice discounting as a source of finance?

      

What are the disadvantages of using Invoice discounting as a source of finance?

  

Answers


sharon
1.The discounter has resource to the borrower and in case may debtor fails to honour his obligation then the discounter can turn to the seller to pay such debt and interest on finance advanced to him.
2.It may be an expensive source of finance in particular if the invoices are small and numerous in which case the costs of collecting these may be too high.
3.This type of finance is usually available to those companies whose debtors are highly rated in credit payment point of view thus may be discriminative if a given company has unknown debtors in which case they cannot be discounted.
sharon kalunda answered the question on April 16, 2019 at 14:15


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