Invoice Discounting For Small Businesses

 

INVOICE DISCOUNTING is one of the simplest forms of invoice financing. It is a kind of loan in which the invoices act as the collateral. The invoices generated are mostly to be paid between the periods of 30 to 90 days by the customer; it may vary According to the policies of different companies. But when a business requires the money for its WORKING CAPITAL, this amount acts as a hindrance in the workflow of the business. This is where the role of a lender comes into play. The small businesses can forward these unpaid invoices to the financier who after analyzing the authenticity of the invoices offer a short-term loan to the business. They provide them with 70-80% of the total amount of the invoices.

A perfect example of INVOICE FINANCING:

Suppose a small business owner Manoj has invoices worth Rs 1,00,000 that are yet to be paid by the customers. Manoj forwards these invoices to lender X. After scanning the invoices the lender credits the amount of Rs 80,000 to Manoj's account and it can be used by him for further business transactions. When the customers pay their outstanding invoices they are credited directly in the account of the lender i.e. company X about which the customers are unaware of. The company X then transfers the amount to Manoj's account after deducting their fees. The amount of fees deducted varies depending upon the duration in what the customers pay back to company X, the longer the time period the higher is the fee.

INVOICE FINANCING has proved to be of great advantage for small businesses. Some of them are listed below.

Better Cash Flow

The top most advantage of INVOICE FINANCING or INVOICE DISCOUNTING is that it helps in the betterment of the cash flow of the company making it better for the company to cover up the expenses of the company.

Flexible Payment Terms.

In order to attract more customers, you can easily extend your payment terms from anywhere between 30 days to 90 days, as you do not have to worry about the lack of funds required for running the company.

Easy Eligibility And Simpler Application

The application process is also quite simple in this process of BILL DISCOUNTING, as only a few documents mainly the invoices are to be authenticated, unlike the other sources of finance which has a never-ending list of documents to be submitted and verified. It is one of the easiest ways of procuring finance which requires the least of the paperwork.

Fast Credit

Unlike other credit sources which can take weeks or even months because of its legal formalities to be fulfilled. INVOICE FINANCING is a kind of SUPPLIERFINANCE that provides credit mostly within a week once the invoices are submitted.

So next time your business gets short of funds, you can go for PRIORITY VENDOR India's Largest Online Vendor Finance Platform which provides the option of INVOICE FINANCING which is a much quicker way of obtaining credit, rather than reaching out for traditional financial institutions which might take a lot of time and a lot of paperwork.