Hi Marina
Dare I ask which invoice discounting company? Might be one Ive used so I can give more specific help.

Re the 'intregates with Sage' - dont let this worry you too much - usually just means that when they get reports off you they can dump into into their system so they can read it better (and see below about customer accounts). Might also mean that you can get reports that you can then feed direct into your sage, although Ive never seen that. Worth double checking what they mean.

So the invoice discounting facility is a 'confidential' facility which means that all your clients will continue to pay you direct and not know that the discounting company have lent you money against their invoices. It is the simplist one for you to manage.

On day one the invoice discounters (I will call them I/disc for short as I cant be bothered keep typing that out!) will advance you a percentage against the debtor book that is o/s - 70% or some such. Say they lend you £100k.

I would set up a Bank account for them called 'I/disc' so you can keep track. On sage - transfer from I/disc to your normal Bank so their facility shows as £100k o/d.

As soon as your first debtor pays off part of the debt with you, you will be required to ship that money immediately to the I/disc Bank account. Say £20k is repaid by one debtor (I know, its not realistic, just for ease of explanation)

At that point - key the Customer receipt as normal and allocate to your debtor from your normal Bank account. Debtors reduced by £20, normal Bank account increased by £20k.

Then do a 'transfer' to the I/disc Bank (via your real Bank and also on sage). I/disc facility now stands at £80k o/d.

They will also then allocate this £20k to your debtor account at their end. You should be able to full reports from their system which shows this - I would always encourage you to check that their allocations of those funds match with the allocations you have done in sage. Not a mammoth job but one worth keeping on top off as saves awkward reconciliations months down the line when its gone pear shaped!!! I had a client with well over 500 invoices a month and it was manageable.

Once they have allocated to their invoices, they should then release the balance to you (70% originally, so now 30% will come back to you).

Just key this as a transfer from I/disc 'bank' in sage to your normal bank.

I would suggest perhaps a spreadsheet to start with so you know which transfers relate to which pay ins etc - up to you!

Confidential facility is much easier to control as the above mechanics are very straight forward.

You should be able to get a 'Bank statement' equivalent, called an activity log or something similar, direct from their system on a regular basis - my last one I was doing every 2 - 3 days as the volume was huge, but maybe once a week might be sufficient. Label up this printout to show who the monies relate to in case of a query a couple of months down the line. (or use the spreadsheet I mentioned earlier). This Bank statement will probably have other daily movements on it, such as an array of discounting charges including charges for eg uploads of new invoices, CHAPs payments of new funds to you and 'interest' (although they arent allowed to call it interest - Ive just gone blank on the terminology they use, but again they will be open with you about it!). These can be keyed weekly or whatever from that statement or as you do with your normal Bank account once a month. TBH I would suggest you key it directly from that sheet until you get used to how the system works.

I would set up an 'invoice discounting' charges nominal close to the Bank charges nominal 79xx and one for the 'interest' charges in that area too.

Be careful about VAT. VAT is only payable on SOME of their charges - they should provide that info , although worth asking them, although the best discounters will have it showing on that 'Bank statement'. Eg Some charge VAT on CHAPS payments, some do not!!

They should give you a relationship manager that you can ask all these questions of and most are really helpful.

Once a month they will provide what THEY call a statement....which usually is the VAT invoice in effect, as well as confirming the balance, availability etc.

When you issue new invoices to your debtors - that information needs to go to them so they can make further advances. Usually they want to see the actual invoices but some will allow a upload without viewing them depending on how many you have. The upload will be via their own software - again ask them how to do it. The good thing about them using sage integrated software is that the 'customer' account reference you use from sage, will be the same one they use on their systems.

Dont forget to upload any Credit notes you issue on to their system as well as sage - also point them as to which invoice is should be linked to, much as you do in sage when you allocate them.

Their systems usually provide a myriad of reports. One Im sure your client will be very keen on will be the availability report as from that they can ascertain if they can do a further drawdown. Just make sure you can get all the ones you need.

Just a final word on the 'Bank statement'/activity one you will need - Ive come across ones where they do not have a running daily balance, but if you push for it most I/disc companies can provide it. Might just be a bit hidden. EG some will show the main report which shows the 'uploads' of invoices - it isnt this one you need. Its sometimes called the 'client account' - just shows ins/outs and charges.

Sorry if Im rambling, trying to recall everything you might need and hope Ive covered everything. Honestly its dead simple once you get going! But let me know if you are struggling.