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What is Invoice Discounting?

Invoice discounting is the practice of using a company's unpaid invoices to raise working capital & fulfil its financial needs. Traditionally, financial institutions including banks and NBFCs have been discounting invoices for MSMEs. Invoice discounting involves transfer of rights on an asset (invoice) from the seller (i.e. business) to the financier (i.e. investor) at an agreed value.

How does it work?

KredX provides a marketplace/platform for business owners to sell and investors to purchase invoices raised on blue chip companies. It combines the best in class technology experience with credit underwriting & data analytics capabilities to create a brand new investment asset class. Business-owners looking for an advance on their invoices, raised against blue chip/creditworthy institutions, can use our platform to sell these unpaid invoices at attractive rates.

Register yourself with us on our website as a business and we will help you sell your invoices at competitive rates.

What is the eligibility criteria for businesses?

Any business that supplies goods/services to large blue-chip companies can avail the bill discounting services provided by KredX. Eligibility and amount of discounting is governed by the creditworthiness of the business and therefore they should be willing to share their financial information and other related documents.

Does KredX have an upper sanction limit?

We have no upper limit for sanctioned amounts for your invoices and it is solely dependent on the business’s requirements. The upper limit depends on the business requirement and the eligibility as per KredX’s criteria.

What is the maximum invoice discounting tenure?

As we provide a short-term investment facility to our investors, we only offer tenures upto 90 days as of now.

Will KredX’s invoice discounting facility affect my balance sheet?

No. We offer a zero-liability bill discounting service. Since the working capital is availed using invoices, it bears no impact on your balance sheet.

Will my financial information be shared with third parties?

KredX is a ISO 27001:2013 certified private entity that deals with secure information from our clients. The ISO certification is further validation of the high standards we follow.

What is the KredX TDS Payment Policy for business?

All invoices listed on the KredX platform on behalf of the business are purchased by our network of investors. The benefits accrued through this instrument is an income for these investors and hence, attract a TDS of 10% as per the IT ACT, Government of India, under Section 194A.

As per our TDS Payment Policy, KredX will deduct the TDS amount due from the total payment but not deposit the TDS amount on behalf of the business’s Company. Partners will be required to deposit the respective TDS liabilities to the Income Tax Authority on their own regularly before the due date. Furthermore, the TDS deposited needs to be allocated to the Investor's PAN by the end of each quarter. To ease out this entire process, KredX will provide all the necessary details along with TDS liabilities as well as Investor's details such as PAN number and amounts to be allocated via KredX Dashboard on an as-you-need basis.

KredX will initiate the refund of the TDS amount withheld once the partners submit the Form 16 for each quarter, post a quick internal verification of the submitted Form 16

Kindly note that KredX will not refund the withheld amount till we receive the Form 16 for the previous quarters.

What happens if KredX goes out of business?

KredX in collaboration with their partner bank has facilitated opening of an escrow account for each individual member. All transfer of funds happen through these escrow accounts. In case of liquidation of KredX due to any financial/legal reason, money in a member's escrow account will be returned to the respective owners immediately. Money involved in the process will not be transferred to KredX's account at any stage (except service fees and government taxes, etc.).

What is revenue-based financing?

The revenue-based financing solution helps businesses gain access to funds by pledging a certain part of their expected future revenues. This is calculated on the basis of the business’s current, monthly, or annual recurring revenue, and helps businesses tap into the capital required to grow, maintain or expand their operations with improved efficiency without having to dilute equity.

How is recurring revenue calculated?

The recurring revenue is a forecasted projection calculated by multiplying the total number of paying users with the average revenue per user.

What is a recurring revenue?

A recurring revenue refers to a company’s revenue stream which is based on the percentage of a business's revenue that is supposed to continue on a regular basis in the future and is the main revenue stream for SaaS and subscription-based companies. Also known as MRR or Monthly Recurring Revenue, recurring revenues are predictable as they occur at regular periods unlike one-off sales.

What is the average tenure for the revenue-based financing solution?

KredX offers tenures of 6-18 months for the revenue-based financing solution

What is a recurring revenue model?

A recurring revenue model refers to a particular model, where a business makes money by providing access to products or services for regular payments.

What is Lease Rental Discounting?

The Lease rental discounting or LRD solution helps businesses access capital against money tied up in lease or rental agreements. This solution discounts future rentals freeing up funds required for business growth and expansion upfront.

What is the maximum tenure offered by KredX for the LRD solution?

KredX offers a maximum tenure of 6-18 months for the lease rental discounting solution.

Is there an upper limit for the amount that can be drawn against lease agreement?

The maximum value or upper limit depends on the business needs and the eligibility as per KredX's criteria.

What is the eligibility criteria for Lease Rental Discounting?

Eligibility and amount of discounting are governed by the creditworthiness of the company. Hence, the business should be willing to share its financial information and other related documents.

What is the KredX Investor Partner Program?

The KredX Investor Partner Program is designed to drive profit for partners, thereby generating measurable value and helping your clients. At KredX, we provide a unique investment opportunity for investors to earn above-market returns at low-risk within 30-90 days, thereby enabling healthy portfolio diversification.

How can I become a partner?

You can join our thriving partner community by simply registering yourself here. We’ll then reach out to you to onboard you and help you explore the best of the alternative investments world for your clients.

What is the KredX Business Partner Program?

KredX Business Partner Program is tailor-made to serve your clients’ business requirements. Through the KredX Business Partner Program, we aim to ensure access to our technology-powered platform for all partners to help drive business success while creating avenues of sustainable revenue generation in the process.

How can I become a partner?

Becoming a partner on KredX is fairly straightforward. Simply register yourself here and we’ll be in touch with you to onboard you and help you explore the best of the alternative financing world for your clients.

What is Invoice Discounting?

Invoice discounting is the practice of using a company's unpaid invoices to raise working capital & fulfil its financial needs. Traditionally, financial institutions including banks and NBFCs have been discounting invoices for MSMEs. Invoice discounting involves transfer of rights on an asset (invoice) from the seller (i.e. business) to the financier (i.e. investor) at an agreed value.

How does it work?

KredX provides a marketplace/platform for business owners to sell and investors to purchase invoices raised on blue chip companies. Investors looking to invest money for a short term (30-90 days on an average) can earn attractive returns on their investment by purchasing these future cash flows. It combines the best in class technology experience with credit underwriting & data analytics capabilities to create a brand new investment asset class.

Register yourself with us on our website as an investor and we will help you park your investments in this unique asset class with varying maturity periods at an attractive risk-adjusted rate.

Who can invest with KredX?

  • Individual resident investors
  • HUF / Proprietorship registered in India
  • Institutional investors
  • Banks, NBFCs and other Financial Institutions
  • NRI investors (Provided you have an NRO account and comply with basic predefined KYC guidelines, i.e., PAN card and valid Indian address proof)

Is there a minimum amount for investment?

As of now you can invest a minimum of INR 3 lakhs per deal. This has been set to ensure that you have sufficient liquidity to invest in an alternative investment class and the required risk appetite for the same.

How can I become a member of KredX?

Signing up on KredX is very simple. SImply provide your contact details on our website and our relationship managers will contact you to complete the registration process. As a part of our KYC norms, we will need a small set of documents to ascertain your investor's status. Once those documents are received and vetted, you will receive an email from us notifying you of your account post successful onboarding.

How do I add the ICICI escrow account as a payee?

Log into your netbanking/mobile banking app > Click on Add Payee > Select Other Bank Accounts > Enter the details > Save/Confirm the same.

Note: ICICI bank account holders are requested to add the escrow account as an external bank account.

What kind of returns can I expect as an investor on the KredX platform?

KredX does not play a role in deciding the discount rates of the invoices. The returns on your investment will be governed by market forces on the basis of demand and supply economics. Expected yield corresponding to deals will be made available to investors before any purchase, this ensures that investors know their returns before initiating the fund transfer.

Does KredX guarantee my returns?

KredX provides a technology platform to connect sellers of invoices and investors and execute transactions between them. KredX provides certain tools, for example - credit report of the seller, enterprise report (blue-chip company) among others - to make a calculated investment decision.

KredX does not guarantee any fixed return to its investors and the investment would be subject to the traditional market risk associated with invoice discounting. Please refer to the various reports made available on the platform during deal purchase for details.

Do I have to fund the entire invoice amount?

No, as an investor, you can decide on the amount you would want to invest in any invoice. You can either fund partially or fully an invoice.

What is the tenure of investment?

Tenure of the investment is linked to the invoice payment date. Every invoice will have a different maturity period. We have seen that historically it has ranged from 30 days to 90 days.

Why should I invest through KredX?

Invoice Financing is a very niche product in the asset based financing arena. It carries minimal undue risk while generating superior return on investments. In advance economies, it has emerged as a major form of investment. KredX's Invoice Financing platform ensures a higher short-term yield for its investors. Our conservative and ever evolving risk management policies minimizes the risk of investing for our investors. Our experience in MSMEs financing space helps us in catering only to the lowest risk segment within the space.

Will my financial information be shared with other third parties?

KredX is a ISO 27001:2013 certified private entity that deals with secure information from our clients. The ISO certification is further validation of the high standards we follow.

What happens in case the invoice is not paid by the company?

We have an established due diligence process in place backed by manual verification of the parties. We are also very selective in choosing the people with whom we do business.

The borrowers are obliged legally to pay back the amount owed to the investors irrespective of whether the invoice is paid by their customer. In the remote case of a default by the customer, we will facilitate legal help for them and will provide assistance in recovering the loss. We have also tied up with various collection agencies to recover the amount due from the business in case of default

What is the risk involved?

Any investment comes with its own associated risk. The risk could be total capital erosion. However, we have taken several steps to mitigate the risk – both strategically and operationally:

  • Comprehensive risk management framework – Detailed credit analysis of sellers and their financials at onboarding
  • Verification process - Invoices are verified physically. Moreover, invoices are restricted to only blue-chip companies.
  • Strong legal framework – All sellers are required to sign our legal agreements to ensure our investors are well protected.
  • If a blue-chip company does not pay the invoice money in the future – the small business is still liable to pay the money owed to the investor.
  • If the small business collapses, the blue-chip company would still pay the invoice money and this will be paid directly into the escrow account which will be transferred to the investor.
  • KredX is a tech platform and it does not assume any credit risk on behalf of the investors.

What is the risk mitigation process at KredX?

The KredX business model is one where investors do not face any execution risk. Our 360° credit risk analysis system takes place at multiple stages.

  • Business-Onboarding Stage We follow a three-pronged approach that is dependent upon the business, the enterprise and their relationship to arrive at a KredX Score for every business.

    • Business:

      1) Credit credentials (Credit reports of company and individual reports of directors)

      2) Financial Health & Stability (All financial and company documentation)

    • Enterprise:

      1) Credit Rating of Enterprise

      2) Fundraising Ability

      3) Liquidity

      4) Market News

Relationship Between Business and Enterprise:

1) History of working relationship

2) ayment timeline

Post Evaluation Stage

Legal mechanisms such as undertakings, bills of exchange, review of legal proceedings and Board for Industrial and Financial Reconstruction (BIFR), etc. involving the vendor and the enterprise.

Invoice Listing Stage

Verification of every invoice before listing on the platform

Invoice Purchase Stage

KredX monitors the security of every transaction through Escrow Accounts (in collaboration with ICICI Bank) for both Businesses and Investors, separately.

In addition to this, all the important data points after evaluation by the KredX risk team are summarised in different reports at the vendor, enterprise and deal level.

What happens if KredX goes out of business?

KredX in collaboration with their partner bank has facilitated opening of an escrow account for each individual member. All transfer of funds happen through these escrow accounts. In case of liquidation of KredX due to any financial/legal reason, money in a member's escrow account will be returned to the respective owners immediately. Money involved in the process will not be transferred to KredX's account at any stage (except service fees and government taxes, etc.).

What is Alternative Financing?

Alternative financing refers to financing verticals outside of traditional financing and banks such as loans as a means to circumvent longer documentations & processes, red tape, and gain quicker access funds. Alternative financing options are usually available online, examples of which are invoice discounting, crowdfunding, invoice factoring, etc.

What are Alternative Investments?

Post the 2009 economic crisis, the need for investment avenues with higher returns and shorter tenures arose, paving the way for alternative investments. Alternative investments can be defined as any form of investment that falls outside of conventional banking and stock market investment such as invoice discounting, peer-to-peer lending, etc. You can read more about it here.

What is Invoice Discounting?

Invoice discounting is the practice of using a company's unpaid invoices to raise working capital & fulfil its financial needs. Traditionally, financial institutions including banks and NBFCs have been discounting invoices for MSMEs. Invoice discounting involves transfer of rights on an asset (invoice) from the seller (i.e. business) to the financier (i.e. investor) at an agreed value.

How is Invoice Discounting or Bill Discounting different from Business Loans?

Most businesses opt for financing options available in the market to tide over lean periods, the most obvious of which is a business loan from banks or financial institutions that help businesses with their short-term operational costs, expansion goals, upgrading equipment, etc.

However, gaining access to loans in India is rather cumbersome due to a number of reasons and the time-consuming processes involved.

The birth of alternative financing solutions, and the revival and modernisation of an age-old financing method called invoice or bill discounting has helped address these problems. Invoice or bill discounting is a practice where businesses sell their unpaid invoices to raise working capital. Not only is it easier to access funds through invoice discounting, but is also quicker when compared to business loans with businesses gaining access to around 80% of their invoice value in just 2-3 days. Click here to learn more.

What is KredX?

KredX is an online invoice discounting platform where business owners get an opportunity to raise funds for their working capital needs at attractive terms by selling their unpaid invoices raised against blue chip companies while providing investors with a unique alternative short term investment avenue. KredX aims to remove operational inefficiencies around the invoice discounting space by extensively using technology and its data analytics & credit underwriting capabilities.

When was KredX founded?

KredX was founded in 2015 by Manish Kumar and Anurag Jain. You can find more information about our inception and our journey here.

Who is behind KredX?

KredX is led by a team of seasoned industry experts, tech stalwarts and data czars. Please visit this link to learn all about our team.

Is KredX funded?

Yes, KredX is a Series-B funded company that is backed by some of the biggest global VCs such as Sequoia Capital and Tiger Global.

How can I join KredX?

We’re always on the lookout for rockstars! If you’d like to join our team, do visit https://www.kredx.com/join-us/ and check the current openings for relevant roles.