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.

Early Payment Discount Importance For Today's Businesses

Payments today have changed a lot since the old times. The manual invoices have been replaced by latest digital technologies with less of paperwork. These technologies have helped us in gathering a clearer and transparent picture of our payments and transactions. There has been an increase in the practice of early payment discount. More and more businesses are opting out for the supplier financein India.

For most big organizations in India the amount outstanding against their invoices acts a working capital in India for their business. As working capital is the basic necessity for a business, they try to stretch the payment dates for as long time as possible so that they are able to fully utilize the amount outstanding. The vendors whose amount lies outstanding also want the money for further business; this is where invoicediscounting in India comes in role. The vendors are ready to accept a lesser amount against their outstanding amount if they are provided with an early payment in India. In the corporate world, it can also be known as a forced discount on the vendors. If the vendor is in a weaker cash position and does not have enough cash then they are left with no choice but to accept a lesser amount than the one mentioned in the invoice in return of the early payment.

                                     

Assuming a fair play for all the parties involved it is not necessary that a company runs smoothly even after the vendors have an early payment discount clause in their contracts.

Considering both buyers and sellers

In place of offering a fixed discount rate the businesses in India can work in coordination with the vendors and evaluate each and every invoice thoroughly offers a dynamic discounting in India. It has to be like a grading process which should work according to the duration of early payment. The quicker the payment is the higher is the discount offered. This process is managed through digital software; this software enables buyers and sellers to access invoices and payments digitally providing a real-time Financial visibility. They are able to differentiate which invoices are eligible for what type of discounts.

                                   

This digital platform has unified the process of manual invoicing into an electronic and digital platform which reduces most of the work in involved in manual processing making it much easier to work transparently for both the buyer and the seller. Buyers can have access to their cash and balance sheet to increase their size and amount of early payment discount.  Through this process of bill discounting in India, the sellers get access to an early payment giving them the working capital to continue their business.

These Digital platforms are extremely necessary for the smoother flow of business as it enables faster invoicing and low cost. The real advantage of dynamic discounting is that it gives a better control for negotiation to the sellers as well. There are many good companies in India providing these services PRIORITY VENDOR is one of the leading companies for supplier finance in India.