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Turn Unpaid Bills Into Instant Working Capital With KredX Bill Discounting
Funds In 24 - 72 Hours
Collateral-Free Solution
Hassle-free Onboarding
Funds In 24 - 72 Hours
Collateral-Free Solution
Hassle-free Onboarding
Most businesses provide credit facilities to their customers to boost sales and build brand loyalty. However, the issue arises when a significant amount of money is stuck in bill receivables - impacting the working capital required to pay operating expenses. If credit is not given wisely, there will be a huge discrepancy between the cash inflow and outflow of the business.
Therefore, it is imperative for any business to make sure their working capital remains unaffected— even if it requires leveraging unpaid bills through bill Discounting. Bill Discounting service offered by KredX can help you access collateral-free, working capital to fuel your business requirements.
It is a trade-related activity in which a company’s unpaid bills which are due to be paid at a future date are sold to a financier (a bank or another financial institution).
In Bill Discounting, the business trades the company's unpaid bills to gain access to short-term financial assistance and maintain the working capital. It is mostly pertinent in cases when a buyer purchases goods from the seller, and the payment is made through a letter of credit. This process is also called “Bill Discounting”. This process is governed by the negotiable instrument act, 1881.
KredX is a leading Bill Discounting platform that allows businesses to trade their bills digitally for quick access to short-term funds.
The Bill Discounting process is transparent and simple. It includes the following steps:-
1. Business generates an bill (usually payable within 30 to 90 days) from the date of sale.
2. Business visits the KredX website and uploads the unpaid bill digitally.
3. Investors in the KredX platform purchase the bill at a discounted rate.
4. The bill value offered by the investor will be transferred to the business account within 24 to 72* hours upon approval.
5. The business receives the funds and facilitates the working capital.
Bill Discounting is advantageous to businesses, banks, finance companies, and investors. Businesses benefit by rejuvenating their cash-flow in-turn helping them stabilise growth and fund business expenditure.
The interest rates are decided based on many factors such as the risk factor, the financial institute. The business will get a better rate if they choose a reputable platform. Bill discounting interest rates are declining from the last two years and more MSMEs are availing aid rather than approaching for a loan.
| Bill Discounting | Business loan |
|---|---|
| Collateral-free finance | Collateral required |
| Quick processing (Usually in a couple of days) | Long processing period |
| Availed for short-term financial aid | Availed for long-term financial assistance |
| Digital process | Generally not a digital process |
| Hassle-free documentation process | Lengthy documentation process |
| Simple eligibility criteria | Stringent eligibility requirements |
| No impact on business balance sheet | Impacts the business balance sheet and is considered as a debt |
The following documents mentioned are required to apply for Bill Discounting in India:
Pre-asset Phase:
Post-asset Phase:
In a broader sense, small and medium-sized companies may find Bill Discounting as an ideal way to boost liquidity. Businesses that are low on liquidity and lack immediate funding, often resort to Bill Discounting to finance their purchase of raw materials and clearing off pending orders.
Other than these, businesses that intend to provide a more extended credit period to customers to sustain market competition can choose this funding option to keep operating activities continuous.
If at any time a business has to meet any of these following needs, they can fulfil the same by opting for Bill Discounting –
To Boost Cash Flow
Bill Discounting is a viable option to inject cash into the operational stream of a business. It helps entrepreneurs to replenish their cash flow and increase immediate liquidity quickly.
For Freeing Tied-Up Working Capital
This funding option allows businesses to free tied-up capital and in turn, eliminate the need of applying for a loan. Moreover, it also proves useful in shortening the working capital cycle.
To Settle Debts
If at any time businesses have to pay their suppliers, but their working capital is significantly low, they can get their bills discounted. With the funds availed, they can pay their suppliers and other immediate liabilities.
Other than these, businesses can also get Bill Discounting services if they need immediate funding but do not wish to provide any security to avail it.
Table of Contents:
1) What is Bill Discounting?The Best Of Alternative Investments, Now On Your Phone
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Bill discounting is the practice of using company's unpaid bills to raise working capital & fulfil its financial needs.
KredX provides a marketplace/platform for business owners to sell and investors to purchase bills raised on blue chip companies. It combines the best in class technology experience with credit underwriting & data analytics capabilities to create a brand new investment asset class.
Business-owners looking for advance on their bills, raised on blue chip/creditworthy institutions, can use our platform to sell these unpaid bills at attractive rates.
Any business that supplies goods/services to large blue-chip companies can avail the bill discounting services provided by KredX. Eligibility and amount of discounting is governed by the creditworthiness of the business and therefore they should be willing to share their financial information and other related documents.
Bill discounting with KredX is an off-the-book financial solution. That’s because it is availed by leveraging the unsettled bills. Hence, it does not have any effect on the balance sheet.
We have no upper limit for sanctioned amounts for your bills and it is solely dependent on the business’s requirements. The upper limit depends on the business requirement and the eligibility as per KredX’s criteria.
The financing option works like a revolving funding facility. The discounting service provider forwards funds against unpaid bills based on their worth.