A finance lease or capital lease is a type of lease. It is a commercial arrangement where:

The lessee (customer or borrower) will select an asset (equipment, vehicle, software); The lessor (finance company) will purchase that asset; The lessee will have use of that asset during the lease; The lessee will pay a series of rentals or installments for the use of that asset; The lessor will recover a large part or all of the cost of the asset plus earn interest from the rentals paid by the lessee; The lessee has the option to acquire ownership of the asset (e.g. paying the last rental, or bargain option purchase price);

The finance company is the legal owner of the asset during duration of the lease. However the lessee has control over the asset providing them the benefits and risks of (economic) ownership.

Invoice discounting is a form of short-term borrowing often used to improve a company's working capital and cash flow position.

Invoice discounting allows a business to draw money against its sales invoices before the customer has actually paid. To do this, the business borrows a percentage of the value of its sales ledger from a finance company, effectively using the unpaid sales invoices as collateral for the borrowing.

Benefits of Invoice Discounting

By receiving cash as soon as a sales invoice is raised, the business will find that its cash flow and working capital position is improved. The business will only pay interest on the funds that it borrows, in a similar way to an overdraft, which makes it more flexible than debt factoring. Invoice financing can be arranged confidentially, so that customers and suppliers are unaware that the business is borrowing against sales invoices before payment is received.