What is invoice discounting and financing?

2 min read

Invoice discounting and financing offered by Bajaj Finserv is a financial service that lets businesses avail finance by keeping its bills receivables as collateral. Get the funding after discounting a percentage of receivables which secures it against any possible bad debts. It is an asset-based solution to meet funding requirements for working capital.

Businesses can receive an advance on cash due from their customers through us, thus, making it an effective financing solution.

Read on to discover the features and benefits of invoice discounting.

  • Instant liquidity: Obtain capital for everyday expenses or growth by availing a portion of the invoice amounts customers are yet to pay.
  • Up to 90%* finance: Keep your bills receivables as collateral and get funding after discounting a percentage of the receivables.
  • Flexible repayment: Repay the credit without draining your cash flow when you receive money from your customers.

What is invoice discounting and financing?

Invoice discounting and financing is a financial service that lets businesses avail finance by keeping its bills receivables as collateral. Obtain working capital after discounting a percentage of your receivables. The collateral secures the credit against any possible bad debts. Invoice discounting and financing is an asset-based solution that frees up liquidity trapped in unpaid customer invoices. As a business owner, you can receive an advance of up to 90%* of the cash due from your customers through us. You can repay the credit availed as your invoices are paid. Some notable benefits of invoice discounting and financing are:

  • Secure funding without keeping other assets as collateral
  • Solve issues related to slow payment of invoices
  • Increase your business’ cash flow or obtain the necessary capital for growth
  • Avail higher funding based on your receivables, as your turnover increases
  • Receive essential guidance from experts to manage your business finance

Alternatively, when in need of capital, you can opt for a long-term loan in the form of a Bajaj Finserv Loan Against Property. Get access to ample, high-value funding for needs like infrastructure development, equipment purchase, business expansion, and other big-budget investments. You can quickly access financing, courtesy of simple loan eligibility criteria and an online application form. The repayment tenor is long, and you can use the loan against property EMI calculator to ensure that you have sufficient liquidity for your regular overheads and running costs.

Capital equipment leasing is yet another mode of financing you can utilise. Here, lease financing institutions fund the lease of equipment which you can retain possession of through a lease payoff. Use it to install capital equipment for your business.

Who can avail invoice financing?

The option to avail invoice discounting is open to any business that sells goods or services to customers with credit terms ranging between 30 and 90 days. Usually, companies operating in the following areas utilise invoice discounting and financing the most:

  • Manufacturing
  • Construction
  • Wholesalers
  • Courier service operations

How is discounting different from factoring?

While financing through invoice discounts is a viable option, the confusion of invoice discounting vs factoring remains. The primary point of difference between factoring and discounting is the incidence of the receivables’ collection and sales ledger control.

In discounting, the responsibility of collecting debtor balance and sales ledger control lies with the business availing it. Factoring, however, shifts the collection responsibility and control of the sales ledger to the lender. Whether you opt for one or the other depends on the credit amount needed and the size of your business. Both factoring and bill discounting are convenient financing methods.

Additional Read: What is loan to value in mortgage loan?

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