Please provide OTP sent to your mobile
Please provide OTP sent to your mobile
Upto 1 Cr
Get an invoice discounting
line up to INR 1 cr.
Upto 90%* of invoice value paid upfront
Repay only when the buyer pays
Indian market consists of both small entrepreneurs and large business houses. The Indian economy is not just dependent on the huge business houses but also on small entrepreneurs. The small businesses and start-ups are the ones who are enthusiastic about their work and bring about rapid change and development in the economy. However, being a small player they are in constant need of continuous and regular cash flow. But for small businesses it sometimes becomes difficult to strike a balance between cash inflows and cash outflows of the business. Sufficient working capital ensures that the enterprise is running effectively and efficiently. But sometimes the unavailability of adequate funds can cause hindrance in running a business. This is where one of the most lucrative options comes into play: the concept of invoice discounting. With invoice discounting, small businesses or entrepreneurs can leverage their outstanding invoice, i.e. bills receivable to generate funds required to overcome the operational expenses.
Invoice discounting also called Bill Discounting is a way in which a company can borrow short term funds from banks or financial institutions based on their outstanding invoices. Invoice Discounting is a manner in which businesses can raise short-term funds to meet short-term liquidity needs. Invoice Discounting is an alternative to a business loan or an overdraft facility. Under Invoice Discounting, the company provides the unpaid bills to the banks or financial institutions and in return, receives funds up to 90% of the outstanding bill value. It helps keep cash inflow from customers constant and they can pay within their normal credit period.
Generally, in start-ups or small businesses, the entrepreneur sells goods to customers in large quantities and on credit. When a sales transaction is carried out on credit, it means the payment for such purchases shall be made at a later date. Usually, the credit period offered varies from bank to bank. However, such a credit transaction creates a shortage of working capital due to payment at a future date thereby locking the amount receivable. So, rather than waiting for the credit cycle to end, small entrepreneurs can borrow money with the help of invoice discounting and invest it in growing the business..
Invoice discounting is one of the most popular methods for arranging working capital for business. Under invoice discounting facility, the invoice raised for the customer is sold to the bank or financial institution at a discounted price. This implies that the money that the business would receive at the end of the credit period is collected instantly. Generally, all lenders offer this facility at a predetermined percentage of the invoice value, which varies anywhere between 75% - 90% and the rate at which the invoice discounting facility is available varies between 1.5% - 3.00%. Here is how Invoice Discounting works:
Entrepreneur sells his commodities to the customer and raises a bill or invoice depicting the particulars of the sale, i.e. date of sale, number of products sold, payment due date, etc. As the transaction is a credit transaction, the time taken by the customer to make payment can be delayed till the due date, while the entrepreneur or seller will expect immediate payments.
Therefore, to retrieve the lockdown funds, the entrepreneur can reach out to banks or financial institutions for invoice discounting facility
The bank or financial institution upon their due diligence shall pay to the entrepreneur as per the predetermined percentage, kindly note, this amount shall be less than the invoice amount. The difference between the actual invoice amount and amount paid by the bank is called the ‘Discounting Fees’ and is taken by the banks or financial institutions.
Later, when the customers pay back to the entrepreneur, they can repay the amount to the bank.
With invoice discounting facilities, entrepreneurs can avail funding up to 90% of the invoice value immediately.
Invoice Discounting is a unique way of raising instant working capital for the business. The following are the unique features of this facility
|Type of Transaction||Loan or financing against outstanding invoices|
|Ownership||The entrepreneur or business retains the ownership of the invoices|
|Collection||The burden of amount collection usually is on the entrepreneur or business|
|Amount of funds received||Up to 90% of the outstanding invoice amount is received|
|Collateral Security||No collateral security is required|
|Financing Cost||Service Charge + Discount Rate as per the agreement|
Indifi is a leading online lending platform that understands the financial needs of businesses. Indifi facilitates tailor-made business loans without security to businesses. Invoice Discounting a popular business loan facility without collateral security from Indifi offers the following benefits to businesses:
Easy and Flexible Repayment Facility
Minimum Paperwork and Eligibility Criteria
Easy and hassle-free Online Process
Low Interest Rates
The most significant benefit of Invoice discounting is the ability to generate quick cash required in the business. Apart from this, the bill discounting facility offers some more subtle benefits to the company as under:
Invoice discounting is used to maintain the balance between expenses and cash inflows daily
This facility can be used to pay-off small business loans, used for equipment financing, collateral-free loans, etc.
With bill discounting, businesses can understand their cash flow in a better manner as the cash which is locked-up due to unpaid bill is quickly released thereby giving companies a hold on the cash flow of their business.
An instant cash availability gives a financial momentum to the business.
Allows entrepreneurs to stop chasing the customers for payment instead they can carry out business easily with available funds
It helps in strengthening cash flow as the business can generate cash quickly due to quicker processing time.
Invoice discounting is an excellent alternative to overdraft facility or business loan
An invoice discounting facility with Indifi requires no collateral security, i.e. finance facility is available whenever the business needs it.
Invoice Discounting can be availed in two ways, namely:
Invoice Discounting with Recourse: Under this method, the banks or financial institutions carry out document verification of the entrepreneur or business and send it to the seller’s bank. In case of default, the entrepreneur or business is liable for the bad-debts
Invoice Discounting without Recourse: Under this method, the banks or financial institutions do not carry any document verification. Additionally, in the case of bad-debts the liability to collect lies with the banker or lender.
The following are the factors which are taken into consideration for invoice discounting:
The financial requirement of the business
Monthly financial turnover of the business
The brand-name or visibility of the business
Active customers of the business
The total outstanding amount of invoices
Here is a list of documents required by the lender to provide invoice discounting facility:
Address Proof of Business and Entrepreneur
Business Registration Proof
GST registration certificate
Filed GST Returns
Ledger of Debtors
Six months bank statement
Audited financial statements of the business
Sellers (entrepreneurs), buyers (customers) and financing institutions are the participants of Invoice Discounting.
Invoice Discounting is for all sellers like Entrepreneurs, Manufactures, and Distributors, who are providing goods on credit. Therefore, any seller selling goods on credit can participate in Invoice Discounting.
No, Indifi does not ask for any collateral security for Invoice Discounting.
Businesses and entrepreneurs can raise funds up to 90% of the outstanding invoice amount.
It is suitable for a wide range of industries like construction, logistics, printing and publishing, transport industries etc.
The biggest advantage of invoice discounting is a steady flow of cash. It mainly helps businesses to generate working capital finance for sellers providing goods on credit. It is much easier and cheaper than applying for a bank loan.
Indifi is a leading digital lending platform providing a convenient Invoice Discounting facility and thereby helping businesses to grow faster.
Applying is quick and easy and typically takes less than 10 minutes. We ask for basic information about you and your business. Securely connect your bank information so we can assess your business without long forms, waiting in line or having to dig up old paperwork. Your association with business services who we have partnered with helps get you more fitting loans.
We need your
When asked, most business owners shared that access to capital is the single biggest roadblock to growing their businesses. With more cash flow, these businesses can hire new employees, purchase more inventory, take more orders, upgrade equipment and boost their marketing efforts.