Hello Mr. Burgess,
Firstly, you are correct, with regards to highlighting the difference between Invoice Discounting and Factoring, above. Another key feature of Invoice Discounting is that it is confidential - so 3rd party debtors are not advised that their invoices have been discounted. With factoring, 3rd party debtors are usually informed that their invoices have been sold.
From memory, I don't think it's a regulated service. However, regulated entities (i. e. Banks) typically won't stray too far away from the Central Bank Regs.
My experience is that there are basically two tiers of Invoice Discounting provider:
* Banks - primarily AIB and BoI
* Non Banks - such as Bibby, Close Brothers, Invoice Fair etc. I believe that Capitalflow are currently exiting the Invoice Discounting market.
Pricing would be similar in BoI, to that quoted by AIB. In truth, there's some ability to negotiate, with rates and fees reduced to secure lower risk customers, or those requiring higher credit limits (at "safe" levels).
Pricing at the Non Bank providers will typically be higher, by 2% - 5%, albeit Bibby have moved a little closer to the two Banks, since forming a partnership with PTSB.
Watch out for "hidden" charges, such as transfer fees associated with each drawdown, all providers have them, but they vary significantly, from one Invoice Discounting provider, to the next.
Non Bank providers will typically provide facilities to smaller borrowers, with limits of €75k - €100k. On occasion, they'll also agree to discount a large individual invoice.
Discounting rates are typically 70% - 80% of the face value of the invoice, depending on the perceived risk (this extends past the risk associated with the trade debtor, to also consider how good the Finance team at the customer's office is - when it comes to record keeping, credit control etc.).
Don't be surprised to see a level of personal guarantee from the promoters, in addition to a charge over book debts (sometimes the lender won't take an actually charge, but simply takes an assignment, complete with pledge that the debtor book won't be given as security to another lender).