CredAvenue – Bill Discounting
Bill Discounting by CredAvenue!
Why Bill Discounting?
Vendor Factoring is a form of invoice finance in which you as a business owner can sell unpaid invoices to a third-party company, known as a factoring company. When you sell an invoice to a factoring firm, the company will pay you a portion of the overall invoice amount and, in most cases, will take complete responsibility for collecting payment from your buyer on your behalf.
This financing technique will assist your company in maintaining a steady cash flow before the buyer pays for the items or services you provide.
Benefits of Bill/Invoice Discounting with CredAvenue
Bill discounting benefits businesses, banks, finance companies, and investors.
Further, businesses benefit by rejuvenating their cash flow, stabilizing growth, and fund business expenditure.
The primary benefits are:
Improved cash flow:Businesses can easily rely on this quick financial aid to access speedy funds and continue to flourish. This process quickens money inflow— profiting the organization by helping them in expansion, development, etc.
Instant access to cash:Bill discounting is an efficient and fast way to assess working capital as the process is hassle-free and involves a minimal documentation procedure.
Collateral not required:There is no requirement to keep any asset as security as the unpaid invoice is considered the collateral itself.
Debt not incurred:Bill discounting also helps save tax liability, and the chances of loss/damage are almost nil compared to other conventional financing frameworks.
Balance sheet not impacted:It does not impact the business’s balance sheet as it is an off-the-book process.
How does the Bill/Invoice Discounting process work?
Step 1: The seller sells the goods on credit and raises the invoice on the buyer.
Step 2: The buyer accepts the invoice and acknowledges paying on a specific due date.
Step 3: The seller approaches the financing company to discount it.
Step 4: The financing company assures itself of the legitimacy of the bill and the buyer’s creditworthiness.
Step 5: The financing company avails the fund to the seller after deducting the appropriate margin, discount, and fee as per the norms.
Step 6: The seller gets the funds and uses them for further business.
Step 7: On the due date of payment, the financial intermediary/ the seller collects the money from the buyer. The collection is done based on the agreement between the seller and the financing company.
Bill Discounting Rate of Interest
The rate of interest offered by financial institutions on bill discounting depends on the following factors such as:
- ✓ Business stability
- ✓ Financial history
- ✓ Business volume & tenure
- ✓ Applicant’s credit score
Why is the Bill Discounting platform for You?
CredAvenue’s CredSCF platform provides businesses with quick access to working capital. Such a platform allows businesses to use unpaid invoices as collateral to get instant working capital for their business growth & expansion.
CredSCF by CredAvevue is an end-to-end Trade and Supply Chain platform. It is the most advanced Trade and Supply Chain Finance platform that has the following offerings:
Vendor Finance Solutions: Sales invoice discounting, sales billing discounting, and purchase order finance.
Dynamic Discounting: Vendor invoice pre-payment via the investible surplus from anchor
Anchor Financing Solutions: Purchase invoice financing/purchase bill discounting, purchase order finance, and sales invoice financing/sales bill discounting.
Dealer Finance Solutions: Purchase order finance, Purchase invoice discounting/purchase bill discounting.
FAQs
What documents are required for bill/invoice discounting?
Documents required are:
- ✓ Business PAN card & address proof
- ✓ Applicant’s Aadhaar card
- ✓ Business Establishment Proof
- ✓ Last 12 months’ bank statement
- ✓ Bill of Exchange
- ✓ Letter of Credit
- ✓ Commercial Invoice
- ✓ Certificates, registrations, licenses, and permits proofs, if any
What factors affect the eligibility for bill discounting?
Factors affecting the eligibility for bill discounting are:
- ✓ Business Vintage
- ✓ Nature or type of business
- ✓ Business Volume and Annual Turnover
- ✓ Financial Stability
- ✓ Repayment history and capability
- ✓ Business Positive Net worth or Profitability
- ✓ Credit rating of a business
- ✓ Previous loan defaults, if any
Why should you prefer bill discounting?
Bill discounting offers the following benefits:
- ✓ Availability of Instant Cash
- ✓ Easy withdrawals
- ✓ Flexibility in repayment
- ✓ Interest-only on the used amount
- ✓ Easy authentication
- ✓ Quick processing with hassle-free documentation
Is bill discounting like a secured loan?
It is unsecured or collateral-free, and your assets will not be on the line in situations as an unfortunate case of non-repayment. Instead, bill discounting is an efficient, quick, and easy way to improve the cash flow of your business.