Invoice Discounting vs. LPO Financing in Nigeria: Which Unlocks Working Capital Faster?
Both products unlock working capital for Nigerian contractors and vendors, but they solve completely different problems in the supply chain cycle. Here is what you need to know.
K
Kredio Trade Finance Desk
17A Dele Adedeji St, Lekki Phase 1, Lagos, Nigeria
Both LPO Financing and Invoice Discounting are asset-light credit tools designed to prevent Nigerian businesses from running out of cash while dealing with corporate payment cycles. However, understanding their timing differences is critical.
LPO Financing (Pre-Execution Funding)
•**Timing:** When you have received an official Purchase Order but have NOT yet delivered the goods or completed the job.
•**Purpose:** To purchase raw materials, pay freight, and hire labor.
•**Risk Factor:** Moderately higher because performance and delivery risk remain with the vendor.
Invoice Discounting (Post-Delivery Funding)
Unlock up to 85% cash against confirmed corporate invoices instead of waiting 90 days for client payout.
•**Timing:** When you have successfully delivered the goods, obtained a signed Goods Received Note (GRN), and issued your sales invoice.
•**Purpose:** To unlock up to 85% cash immediately rather than waiting 60 to 90 days for client accounts payable.
•**Risk Factor:** Lower risk, which typically results in lower interest rates.
When should I choose LPO financing over invoice discounting?
Choose LPO financing BEFORE you execute the job (to buy materials). Choose Invoice Discounting AFTER you deliver the goods and are waiting for client payment.
Is invoice discounting confidential?
Yes! With confidential discounting, your corporate client does not need to know you financed the invoice.
