- KredX Editorial Team
- 12 Nov 20
- business,Invoice Discounting

The Indian Government and financial experts have together touted the MSME sector to be the torchbearer of India’s economic prosperity. However, financial support from the formal banking sector to MSMEs, remains low at only around 16%, according to an IFC-Intellecap report. The report revealed, there was an Rs. 16.66 lakh crore credit gap in the MSME sector, as of June 2019, which has only widened over the recent economic crisis.
Thus, to avert a cash flow slows down and sustain themselves better amid the fierce competition, several companies have turned to invoice financing. This credit option bridges the demand gap to a certain extent, especially for micro and small enterprises.
Importance Of Invoice Financing In A Business
Cash flow issues are a major cause of why several enterprises, especially small-scale ones, struggle to grow or even survive the competition. Matters get worse, when most of your customers defer payments, sometimes as long as 90 days. Such a long duration is bound to overstrain your company’s liquidity, tying your hands from undertaking new projects or addressing necessary expenditures; although you have bills approved by customers. Through bill financing, you can leverage your company’s Accounts Receivables to borrow funds. This way, you can avoid any liquidity crunch caused due to prolonged credit periods of 30 – 90 days. Technically, bill financing allows you to release future cash inflow, which can be a significant benefit when it comes to working capital management. There are several other benefits of this financing option that can help resolve your business’s cash flow issues.Advantages Of Invoice Financing
-
Fast Availability
-
High-Value Loan
-
Simple Process
-
No-Collateral
-
Simple Repayment
-
Choice Of Credit Control