Invoice Discounting For Automobile Business:

According to the latest data, the Indian automobile industry is the 5th largest in the world, as of 2019. In terms of commercial vehicles, it stood at the seventh position. The automobile industry has always been one of the key economic drivers of India, and even more so over the past decade. A general increase in median income of consumers and exposure to better standards of living has prompted a boost in the sales figures in this industry tremendously.

And while this industry demonstrates immense potential, as a whole, businesses individually come across several financial stonewalls. One of these hurdles is clearing unpaid invoices to finance its day-to-day activities. In that regard, invoice discounting for automobile business can be a pecuniary boon. 

With such financing option, businesses can optimise their cash flow and provide for different operational costs without hassle. However, before opting for this financing option, companies must familiarise with their various features. 

What Is Invoice Discounting For An Automobile Industry?

In the course of running a business, an automobile-based enterprise generates numerous invoices against its credit sales, which its clients pay on a later date. That period can vary from 30 – 90 days. In due course, thus, the funds remain tied up. And while so, a business might need to attend to a financial emergency, like paying rent, or make up for a cash-flow deficit. 

That’s where bill discounting for Automobile business comes into the picture. An enterprise can leverage its unpaid bills with a financial institution to secure cash advance against their value. It allows businesses to release the tied up funds before the due date of corresponding invoices. Since the finances availed via invoice discounting do not entail any end-use restriction, companies can utilise it to whatever end it prefers. 

Also, with KredX, businesses can avail cash advance against their unpaid invoices within 24 – 72 hours*. That way, businesses can address any financial emergency sans delay. 

What is The Process To Avail Invoice Discounting Service?

Invoice discounting for automobiles offered by KredX usually constitutes the following steps – 

• A business needs to sign up at our portal and upload the necessary documents.
• - Post document verification and risk evaluation businesses are given a sanction limit
• - Post signing & acceptance of sanction letter business is on boarded as a KredX customer
• - Post successful onboarding, the vendor then becomes eligible to begin listing their unpaid invoices on the KredX platform for invoice discounting
• - Business gets funds within 24-72 hrs of deal listing in the platform

How Can An Automobile Business Benefit From Invoice Discounting?

• Effective Working Capital Management

Working capital is one of the most crucial building blocks of growth for any automobile organisation, be it large or small. Thus, ensuring its proper management is quintessential. One variable that can boost this factor immensely is early access to funds. 

Businesses can utilise funds availed by discounting their unpaid bills to cover several different expenses. It can be used to pay salary to employees, settle rent, take up additional orders, etc. 

• Competitive Edge

In a market of cutthroat competition, it is of utmost importance for automobile organisations to maintain a firmer financial footing. One way to ensure that is through bill discounting for automobiles. 

With this financing service, a business can finance its operations more efficiently and further its profit and growth objectives with greater pace. Enterprises can boost their cash cycles and take on additional sales without qualms.

• Instant Financial Assistance

One of the key features that distinguish this financing option is expediency. Invoice discounting involves minimal formalities, and hence, disbursal of cash advance is faster compared to traditional financing facilities. With such liquidity, business can address any financial emergency with ease. It also improves the overall cash flow of a business. 

What Are The Eligibility Criteria For Invoice Discounting For an Automobile Industry?

An enterprise should satisfy the following criteria to avail of this financing service – 

• It should clock a minimum annual turnover of Rs.25 lakh.
• It ought to possess a business vintage of at least 10 months.
• It must possess a credit bureau rating of 650 or above.
• It should provide its service or products to at least two large-scale organisations, like an MNC, company with a minimum turnover of Rs.1000 crore, or a reputed brand.

What Are The Documents Required For An Automobile Industry?

The documents one needs to submit when applying for invoice discounting service are – 

• Address proof
• PAN
• OVDs of directors’ KYC
• Directors’ CIBIL 
• Bank statements of the last 12 months
• Last 12 months’ sales statistics
• Declaration of loan

Once the business is approved, they need to to furnish these documents – 

• Post-dated cheque
• Articles of Association and Memorandum of Association 
• Board resolution
• Personal guarantee letter

Note that this list is not definitive. Apart from these companies may also need to submit other documents.

Invoice discounting for the automobile industry is one of the most convenient financing options for companies. Businesses can optimise their working capital by discounting their unpaid invoices with KredX without hassle and ensure there’s sufficient cash flow to address all forms of financial obligations.