{"id":6500,"date":"2020-10-15T04:30:58","date_gmt":"2020-10-15T04:30:58","guid":{"rendered":"https:\/\/kredx.com\/blog\/?p=6500"},"modified":"2023-10-26T05:52:19","modified_gmt":"2023-10-26T05:52:19","slug":"how-can-invoice-discounting-help-you-as-an-exporter","status":"publish","type":"post","link":"https:\/\/www.kredx.com\/blog\/how-can-invoice-discounting-help-you-as-an-exporter\/","title":{"rendered":"How Can Invoice Discounting Help You As An Exporter?"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Running an export business requires adequate <a href=\"https:\/\/www.kredx.com\/what-is-working-capital\/\">working capital<\/a> at all times. Any shortage of cash can disrupt the entire process, leading to a chain of unexpected events. Whether it\u2019s warehousing, shipping, or distribution, a constant infusion of capital is essential.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To that end, you may opt for traditional options like a bank loan. However, in export trade, time is of the essence, and a bank loan might require a while to come through. Thus, as an alternative, you can consider availing the <\/span>invoice discounting<span style=\"font-weight: 400;\"> facility.\u00a0<\/span><\/p>\n<h2><b>How Does Export Bill Discounting Service Work<\/b><span style=\"font-weight: 400;\">?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">You may face several challenges when exporting goods, followed by delayed payments from clients. Challenges such as changes in import policies by the local government of the country you\u2019re sending goods to or their geopolitical turmoil can extensively affect even the smoothest trading.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In that case, even with drawn-up and already approved bills, you might face a shortage in cash to sufficiently finance your business expenses. That\u2019s where <\/span><a href=\"https:\/\/www.kredx.com\/working-capital\/invoice-discounting\">invoice discounting<\/a><span style=\"font-weight: 400;\"> for exporters comes in. With invoice discounting, you can leverage the accounts receivable in your business to acquire advanced funds and instantly resolve your cash flow issues with ease.\u00a0<\/span><\/p>\n<h2><b>What Are The Benefits Of Invoice Discounting For Exporters?<\/b><\/h2>\n<ul>\n<li>\n<h3><b>Regulated Cash Flow<\/b><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Several types of companies, including export-based ones, sell products on credit. Moreover, your business may have varying payment tenures with different customers. These factors can combine with cash flow problems and hinder the overall productivity. But, with <\/span>invoice discounting in India<span style=\"font-weight: 400;\"> for exporters, you can release your tied-up funds ahead of such maturity dates and additionally, manage your expenses better.<\/span><\/p>\n<ul>\n<li>\n<h3><b>Fast Disbursal<\/b><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">If there\u2019s one aspect in which invoice discounting trumps every other traditional loan facility, it\u2019s the disbursal time. You can avail of the cash through <a href=\"https:\/\/www.kredx.com\/bill-discounting\/\">bill discounting service<\/a> within 1 \u2013 3 days; whereas, in bank loans, it takes more than 5 \u2013 7 days.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In a trade like export, where financial emergencies are a staple, having quick financing handy, is a blessing in disguise. Be it an unprecedented situation at the warehouse or a sudden issue that has cropped up in transportation, you can resolve it efficiently with this facility.\u00a0<\/span><\/p>\n<ul>\n<li>\n<h3><b>Own Capital<\/b><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">When you avail of the invoice discounting facility, you are not bringing in external cash into your enterprise, like with a business loan or overdraft facility. Instead, you are just liquidating your company\u2019s earnings in advance of the due date.\u00a0<\/span><\/p>\n<ul>\n<li>\n<h3><b>Trimmed Business Cycle<\/b><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">A prolonged business cycle can hurt a business\u2019s short-term financial standing. On top of that, there\u2019s little you can do when a client asks for additional time to layout the payments. In such a situation, your business can be in a real pickle, where payments at your end are delayed and eventually the exports to other clients are also affected.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The <\/span>invoice discounting<span style=\"font-weight: 400;\"> facility allows you to shorten this cycle from sales to payment receipts, thus, ensuring that you\u2019re never cash strapped, and every operation continues without any hindrances.<\/span><\/p>\n<ul>\n<li>\n<h3><b>No Impact On Financial Statements<\/b><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Invoice discounting is neither recorded in the books of a company nor does it appear as a loan in the balance sheet, as per the accounting guidelines. And, since it is technically a process to expedite receipt of payment your company is supposed to receive on a later date, this option does not really impact the financial statement of a company, unlike traditional loans and overdrafts.\u00a0\u00a0\u00a0<\/span><\/p>\n<h2><b>What Are The Steps Involved In Invoice Discounting For Exporters?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">In India, there are a number of financial institutions that provide this facility. Therefore, the exact process may vary across lenders. Nevertheless, the basic steps of it are:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Choose your preferred <\/span>invoice discounting platform.<\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Upload the scanned copies of your unsettled bills in the portal.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Furnish other essential documents, like business vintage proof, tripartite undertaking with the financier, KYC documents of directors, etc.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">After verification of those invoices and documents, the lender will approve the advance and forward it to your bank account.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Once you have collected the due amount from the debtors, you will need to remit the advance amount to the financier along with a nominal service fee.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">You may also need to register with the discounting platform prior to submitting those invoices. Usually, this entire process takes somewhere around 24 \u2013 72 hours*, ensuring ready availability of funds.\u00a0<\/span><\/p>\n<h3><b>Bottom Line<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Exporting goods is largely a capital-intensive trade. It, however, carries a more pronounced risk of delayed payments, which can deter the smooth flow of operations. To that end, exporters can avail of the invoice discounting facility to mitigate their cash shortages easily and ensure smooth trading.\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Running an export business requires adequate working capital at all times. Any shortage of cash can disrupt the entire process, leading to a chain of unexpected events. Whether it\u2019s warehousing, shipping, or distribution, a constant infusion of capital is essential.\u00a0 To that end, you may opt for traditional options like a bank loan. However, in [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":6517,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35,65],"tags":[72,74,37,38],"class_list":["post-6500","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-invoice-discounting","tag-bill-discounting","tag-cash-flow","tag-invoice-discounting","tag-working-capital"],"_links":{"self":[{"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/posts\/6500","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/comments?post=6500"}],"version-history":[{"count":1,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/posts\/6500\/revisions"}],"predecessor-version":[{"id":13718,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/posts\/6500\/revisions\/13718"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/media\/6517"}],"wp:attachment":[{"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/media?parent=6500"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/categories?post=6500"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/tags?post=6500"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}