Invoice Discounting

You won a major project with a reputable company, however this company takes a long time to pay. Cash flow is required on a short-term basis to buy raw materials and pay staff.

Example: Your cost is $60 and your selling price is $100. You run out of cash to deliver the next tranche of goods at $100 as you need $60 to produce goods. You can sell your invoice at $90 for immediate cash. You sacrifice some profit for immediate cash flow.

Invoice discounting is similar to factoring.