For most businesses, sluggish payment of accounts receivable is one of the most common obstructions to their operations. Moreover, maintaining adequate cash flow is another challenge that business owners face when handling monthly budgets. Fortunately, certain financing solutions can mitigate stagnating cash flow, such as invoice discounting. So, let’s discuss why businesses should tap into this financing solution to promote growth. In addition, we will delve into some extra (and exciting) perks of choosing invoice discounting in India during this festive season.
How Does Invoice Discounting Work?
When a business sells or supplies goods on credit to its customers, it draws up an invoice containing the repayment date and the payable sum. For instance, a firm has issued an invoice to its client named ‘A’. Moreover, A is liable to make the payment within 90 days from the date of receipt. However, let’s say that the firm is faced with a cash crunch by the 40th day, but its cash is tied up for the upcoming 50 days. So, what can it do?This is where invoice discounting comes into play. By choosing to finance a business with invoice discounting, the company can leverage its unsettled invoices with a financial institution. As a result, it can easily release the tied-up funds and solve its cash crisis. With the help of invoice discounting, businesses will receive a large portion of the invoice amount. In fact, invoice financing providers in India generally fund up to 90% of the invoice amount. For example, if it has around Rs 2 lakhs tied up in an invoice, it can receive an advance of Rs 1 lakh through this financing solution. That said, it is important to note here that the discount percentage varies based on several factors, such as the invoice amount, customer’s credit history, and the company’s annual turnover.
How Can Invoice Discounting Help Businesses Grow?
The flow of capital into a venture allows it to act on several growth opportunities as and when they arise. Moreover, it enables business growth by facilitating the following:
Access To Quick Capital
Invoice discounting in India allows business owners to raise funds quickly with the help of their invoices. This implies that businesses that opt for invoice discounting services frequently can access cash with ease. As a result, the financial stability allows them to take the necessary steps to boost sales and achieve growth targets.
Traditional business loans call for borrowers to pledge their assets as collateral. On the other hand, invoice discounting allows businesspersons to safeguard their valuable assets from the debt trap. In addition, this financing solution allows enterprises to acquire new assets by ensuring the availability of funds for further asset investment.
Reduction Of Invoice Cycle
From the sale of products to receiving revenues against them, businesses experience a long cycle. In this case, invoice discounting enables them to shorten their invoice cycle and undertake various projects aimed at expansion.
When a firm opts for a business loan, the transaction is recorded as a liability on its balance sheet. Luckily, this is not the case with invoice discounting, which does not affect a company’s balance sheet in any way. Therefore, an enterprise can streamline its cash flow and reach out to potential investors without being bothered about their liabilities.
Why Choose Invoice Discounting During This Festive Season?
With the growing popularity of digital invoice discounting service providers in recent years, acquiring funds has become extremely hassle-free. More so, one does not need to get involved in unnecessarily lengthy and documentation for approval and disbursal of funds. Instead, tech-enabled invoice discounting companies like KredX have surpassed the outdated paper-based models, which allow them to disburse loans at the earliest. For instance, with KredX, businesses can get access to working capital in 48 hours*. In addition, when you turn to KredX during this festive season, you can earn up to 50% cashbacks and rewards. Moreover, you will get the amount sanctioned within seconds and at reduced interest rates.
Hence, businesses that wish to tap into their capital and accelerate growth can choose invoice discounting services. Therefore, it is about time that they begin evaluating the providers of invoice discounting in India. Moreover, businesses can safely rely on KredX to finance their operations as well as growth in the long haul.
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