KredX Process 101: Vendor Documentation & Onboarding

As India’s leading invoice discounting platform helping businesses through our working capital solution, we are often asked how KredX ensures the genuinity of invoices listed on the platform and how we weed out the defaulters from genuine vendors like yourselves. Here we break down and explain the process we follow to ensure this.

Being a cash flow solutions provider, KredX requests our customers to provide a set of documents at three different stages: Pre-Sanction, Sanction and Post-Sanction.

Pre-Sanction

Once a business looking for our invoice discounting service approaches KredX, we initiate the process to evaluate their profile. At this stage, we request for:

• KYC of directors and authorised signatory of the company, as per the RBI mandate. This not only acts as an identification proof, but it also helps KredX evaluate the intent of the people behind the business.
• CIBIL record of directors to give us an indication of any frauds or defaults in the past along with CIBIL Pull Request.
• Proof of address and PAN Card of company.
• Financial records such as company bank statement of the last 12 months to ascertain the business’s cash flow, timely payments from the corporate company supplies to, loans (if any), etc. and books of account/audited financials such as Profit & Loss, Balance Sheet, Computation of Income, Notes & Annexure from the last 3 years. In case the company is not older than 3 years, then KredX requests for audited financials for at least 1 year.
• Sales data of the last 1 year to help us decide the sanction limit after a quick tally with the bank statement.
• If the company is a Partnership, a Partnership Deed is to be submitted but in case of a Private Limited, a Certificate of Incorporation is requested. In case the company is a Proprietorship, a Sole Proprietorship Declaration is required.  
• Loan Declaration along with Sanction Letters for all the declared loans with Terms & Conditions, in case the business has previously availed any form of financial assistance like OD, CC or  secured and unsecured loans. This helps us ensure that the business does not have any prior defaults and has been making timely payments.

In case the business has not availed any loan, they will be asked to provide a No Loan Declaration.

Sanction

Once these documents have been evaluated and verified, a Sanction Letter is sent to the vendor to be accepted and signed. This letter has to be signed and returned within a stipulated period, after which the details mentioned in the letter becomes void.

Post-Sanction

Once the vendor has signed the Sanction Letter sent by KredX, we require the following documents to be able to begin listing the invoices on the platform.

• Board Resolution signed by the at least two directors of the company in the case of a Private Limited Company. This helps us confirm the authorised signatory(s) of the company and helps avert any potential fraudulent activities. In the case of a Partnership, a resolution signed by the partners of the company if making a third party as an attorney is necessary as per the revised RBI guidelines.
• If the company in question is a Private Limited, then a Memorandum of Association (MOA) and an Article of Association (AOA) are required to be submitted.
• The vendor is requested to hand over post-dated cheques to KredX as security cheques.
• A tri-partite undertaking involving KredX, the vendor and the corporate the vendor supplies to is created and signed. Among other clauses, this undertaking ensures that the enterprise will only credit the invoice amount to the Escrow account created by KredX on the vendor’s behalf, unless otherwise supported by an NOC issued by KredX.
• The vendor is required to pay KredX a nominal annual platform fee which is a small percentage of the approved sanction limit.

Since ours is a technology platform connecting investors with high-growth businesses looking for working capital through invoice discounting, KredX follows a stringent, multi-pronged evaluation process to vet and verify the authenticity and intent of businesses. Not only does this protect our customers, but it also helps build a strong culture of perfectionism within the company and among our business partners.

Post successful onboarding, the vendor then becomes eligible to begin listing their unpaid invoices on the KredX platform for invoice discounting.

The deal listing stage too follows a series of checks and documentations. Once the deal has been listed on the platform, external investors purchase the discounted invoice after which these funds are transferred to the vendor in ~24-72 hours.

As always, should our valuable patrons have any queries with our process, they can always reach out to us at care@kredx.com. The KredX team is always around to answer our customer’s queries and assist them in any way that we can.