- KredX Editorial Team
- 24 Mar 21
- business,Invoice Discounting

Though some businesses often refer to invoice discounting and financing receivables as an ‘enigma’, it’s safe to say they are not mysterious in any aspect.
The reason why most businesses struggle with invoice financing is often because of inadequate knowledge about it.
In case you are having some difficulty understanding the concept of invoice discounting and financing receivables, let’s demystify it.
Take a quick look at the fundamentals below to gain insight into these financing tools and how you can make the most out of them!
An Introduction To Invoice Discounting
It is a part of invoice financing, allowing companies to use their unpaid accounts receivable to access capital tied-up in them. It comes in handy in multiple ways. However, its primary purpose is to provide organisations with immediate access to funds. Typically, two parties are involved directly with the discounting process, i.e., the seller and the financier (who discounts the invoice). You should note that a financier retains a portion of the invoice amount until maturity. Once the seller collects the invoice amount and deposits, the financier releases the remaining balance after deducting their service charge. This arrangement comes in handy for those who sell products or services to customers on credit with a repayment tenure of up to 90 days. Invoice discounting platforms not only help businesses access funds to meet immediate working capital requirements but also to hone professional relationships with customers. How? Customers are not included in the invoice discounting arrangement, which helps companies maintain confidentiality. In turn, it allows them to preserve an image of favourable financial standing.Financing Receivables – A Brief Insight
It is an arrangement wherein businesses use their receivables to access funds and keep their everyday activities moving smoothly. In a broader sense, one can categorise financing receivables as –-
Sale Of Receivables
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Secured Loan