{"id":6487,"date":"2020-10-14T06:40:48","date_gmt":"2020-10-14T06:40:48","guid":{"rendered":"https:\/\/kredx.com\/blog\/?p=6487"},"modified":"2023-12-26T12:08:13","modified_gmt":"2023-12-26T12:08:13","slug":"how-can-bill-discounting-help-your-business-grow","status":"publish","type":"post","link":"https:\/\/www.kredx.com\/blog\/how-can-bill-discounting-help-your-business-grow\/","title":{"rendered":"How Can Bill Discounting Help Your Business Grow?"},"content":{"rendered":"

Cash is king.\u00a0<\/span><\/i><\/p>\n

It\u2019s perhaps an expression you would have heard of if you were running a business. <\/span>Ever wondered what it signifies? <\/span><\/i>\u00a0In simple terms, it denotes the importance of hard cash and tells us more about how sufficient cash flow at all times, takes precedence over registering sales and profits on paper.\u00a0<\/span><\/p>\n

Why\u2019s that? <\/span><\/i>Because any enterprise, irrespective of its size, can struggle to grow or even survive if there is a dearth of sufficient funds to undertake operations that pave the road to future earnings. One of the most prevalent issues that plague adequate cash flow is the mounting of unpaid bills.<\/span><\/p>\n

Bill discounting<\/a> particularly addresses this concern by enabling businesses to make the most out of their resources and chart the way to growth and success.<\/span><\/p>\n

What Is Bill Discounting?<\/b><\/h2>\n

Whenever you sell or supply products on credit to a customer, you draw up a corresponding invoice, mentioning the payable amount and date of repayment. Let\u2019s say, you have issued an invoice to customer A, which is payable within 90 days from the date of receipt. However, you\u2019re cash-strapped by the 50<\/span>th<\/span> day, and all your funds are tied up for another 40 days.<\/span><\/p>\n

What\u2019s the Way Out?<\/span><\/i><\/p>\n

In that case, you can discount your unsettled bills with a financial institution to release those funds in advance and mitigate your cash crisis easily. Through the <\/span>bill discounting facility, you will receive a discounted amount against the total invoice value, which is usually to the tune of 10%.<\/span><\/p>\n

So, if you have Rs. 10 lakh worth of funds tied up in unpaid invoices, you can receive Rs. 9 lakh as an advance via this facility. However, note that the discount percentage shall vary based on your business\u2019s eligibility, which depends on various factors such as your annual turnover, your client\u2019s credit rating, etc.<\/span><\/p>\n

How Does Bill Discounting Work?<\/b><\/h2>\n

In case you are wondering how to avail this credit facility, here\u2019s a look at the steps usually involved.<\/span><\/p>\n\n\n\n\n\n\n\n
Lender<\/b><\/td>\nSelect a lender with whom you want to discount the invoices.\u00a0<\/span><\/td>\n<\/tr>\n
Submit bills<\/b><\/td>\nIf you are applying for this facility online, you need to provide scanned copies of original invoices, along with necessary documents about you and your business.<\/span><\/td>\n<\/tr>\n
Verification<\/b><\/td>\nThe financier checks the veracity of every document and invoice.\u00a0<\/span><\/td>\n<\/tr>\n
Approval and disbursal<\/b><\/td>\nOnce verified, the invoices will be purchased at a discounted rate.\u00a0<\/span><\/td>\n<\/tr>\n
Collection<\/b><\/td>\nFollowing that, you need to collect the outstanding amount from the clients and subsequently forward the loan quantum plus a service fee to such financier.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Note<\/span><\/i> \u2013 Verification and approval tend to vary with every financial institution. In some cases, you might have to register with a lender first and then get verified to carry out further proceedings.\u00a0<\/span><\/p>\n

How Can Your Business Benefit From Bill Discounting?<\/b><\/h2>\n