The key difference between invoicing and factoring is how the business's sales ledger and debt collection is managed. With factoring, the third party provider takes over the management of a business's sales ledger and the collection of customer invoices. In contrast, with discounting the business retains control of its sales ledger and collects on its invoices. This is why the process is slightly different depending on whether factoring or discounting is involved.
In addition, factoring and discounting tend to be more appropriate for different kinds of businesses, not necessarily in terms of the industry, but in terms of how a business operates. For example, invoice discounting usually requires a higher annual turnover than factoring: in most cases, a minimum of £500,000 for discounting versus £50,000 to £100,000 for factoring. Other requirements for invoicing also tend to be more stringent. For example, discounting providers typically want to audit a business's books each quarter, and require that a business be profitable and have a minimum net worth of approximately £30,000. Discounters and factors may also have requirements in terms of the number of different clients a business has, with a preference for businesses that don't rely on a small number of clients to stay profitable.
The reason for these differences is largely because the risks to the third party provider are higher for discounting than they are for factoring. Because the provider doesn't take control of invoice collection, they have more rigorous requirements in terms of the business's profitability, turnover, and net worth.