Invoice Discounting

Steer Through the Busy Festive Season Smoothly via Invoice Discounting

With the festive season approaching, many small business owners are fraught with worry. They are wondering how they will fulfill the mounting orders, make inventory payments, and continue to run their business.

Well, the good news is that they can opt for invoice discounting. This seamless financing capital solution can help to keep your business afloat. Let’s learn more about this incredible bankroll option for small businesses, including its benefits and how it can help you tide over this upcoming festival time effortlessly.

A Closer Look At How Invoice Discounting Works

Invoice discounting is a good way to have your cash flows running smoothly while maintaining a healthy working capital. Also referred to as Invoice Financing, this easy funding option includes keeping your invoices as collateral to avail short-term loans from an invoice discounting company.

Herein you can learn more about how invoice discounting works:

  •  A manufacturer, vendor, or distributor agrees to sell its products or services to a buyer on credit.
  • Both the business and client reach an agreement on certain payment terms, whereby the buyer agrees to pay for the goods within the promised deadline
  • Businesses can approach a reputed invoice discounting provider, such as Livfin, to receive immediate cash against the unpaid invoice
  • The Invoice Discounting company first reviews the unpaid invoice, after which a certain percent of the invoice amount is released to the business
  • After the client accounts are settled, the buyer pays off the debt to the invoice discounting company, which then disburses the remaining amount to the business minus the applicable fees

5 Reasons To Opt For Invoice Discounting This Holiday Season

1)  Cash Flow Optimization

Invoice financing in India gives you access to cash that you need. Well, the seasonal rush can lead to doubling or tripling your sales during this time of the year. Now, how will you keep pace with this increased demand for your offerings? Only keep your invoices as collateral when you partner with an invoice discounting provider to pay your suppliers and employees on time.

By opting for invoice discounting, you receive money in advance for your unpaid invoices. In turn, you can meet the rising demand for your holiday orders. As such, you do not have to wait for weeks or months for your money. You can then have a steady flow of cash while doing away with all your financial worries.

2)  Cost Savings

When you pay your suppliers on time, you can avail cash discounts, ranging from 1% to 5% of the invoice amount. Yes, by collaborating with a Supply Chain Finance Company in India, your suppliers receive their money on time at a discounted rate. However, for timely payments, you can also enjoy cash discounts from your suppliers and save big on your purchases. You can also pass on the benefit to your customers by extending discounts during the festive rush, which can result in higher sales.

3)  Business Growth

With the availability of immediate cash during the festive season with invoice discounting, you can drive business growth. Launching marketing campaigns, purchasing new equipment, employing more staff members, or expanding operations – you can seize all these opportunities when you have working capital. Thanks to invoice discounting, you have all the required financial flexibility to explore these initiatives and take your business many notches above.

4)  No Debt Involved

When it comes to conventional lines of credit, you are required to pledge your assets as collateral, which means your debt piles up. On the other hand, invoice discounting does not require businesses to incur additional debt. Rather, businesses are receiving their own money in advance. Hence, if your business has limited assets, this financing capital solution is a viable option. Also, by reducing your reliance on debt, you can enjoy greater flexibility and financial freedom while utilizing your resources to take your business to the next level.

5)  Credit Sales

You can increase your credit sales by opting for invoice discounting this festive season. That’s because this quick financing option comes with the benefit of easy cash availability by keeping your invoices as collateral. Companies are then more confident about conducting their business on credit with their loyal customers who pay diligently. Overall, invoice discounting converts credit into liquid cash to streamline business processes and support business growth.

Final Thoughts

The benefits of invoice discounting for on-demand service providers this festive season are manifold.  Boosting sales, maintaining healthy cash flows, and seizing growth opportunities, all become possible with Invoice financing in India. Moreover, you can reduce your risks of invoice discounting when you choose Livfin as your trusted invoice discounting partner. Give us a call to know more about how to improve your business prospects with invoice financing today!

FAQs

1)  Are there any cons of invoice discounting?

There are various disadvantages of invoice financing. For starters, you have to incur hefty commission charges and processing fees, which can affect your profits. Also, taking many loans because of high credit sales is considered a bad practice, which can negatively impact your reputation. Furthermore, you may face financial troubles if your customers default on their payments.

2)  Are invoice discounting and invoice factoring the same?

NO. Invoice financing and invoice factoring are not interchangeable terms, although both methods provide immediate access to cash against unpaid invoices. As far as invoice discounting goes, the business does not lose control over its sales ledger and client relationships. In contrast, invoice factoring entails ceding these rights to the third-party financing company, which becomes responsible for the collection of your invoices.

3)  How to choose an invoice discounting partner?

Before you decide to work with an invoice discounting partner or a Supply Chain Finance Company in India, you should consider the fee structure, the reputation of the institution, and its years of expertise. Besides that, make sure to review the company’s policies, technologies deployed, and your specific requirements.

4)  How is interest determined when a business opts for invoice discounting?

The prominent invoice discounting partners offer low interest rates. The interest charges are between the range of 1.5% to 3% of the invoice amount.

5)  How safe is invoice discounting?

Invoice discounting is quite safe for buyers and investors when they choose a renowned invoice financing partner. Nonetheless, there are chances that the customer defaults on the payment, which could affect the repayment schedule of the business or lender.

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