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    Invoice Discounting

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    Invoice Discounting

    Businesses can use invoice discounting to gain immediate access to funds held in outstanding invoices as well as to tap into the value of their sales ledger. It’s simple: when you invoice a customer or client, the lender pays you a percentage of the amount, increasing your cash flow.

    Invoice discounting is also referred to as a series of short-term business loans secured by invoices. In other words, the lender knows you owe them money and is willing to lend you the majority of it before your customer pays you.

    Small-to-medium-sized businesses’ cash flow may be stressed while waiting for clients to pay invoices. This problem can be solved by utilising invoice discounting.

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    MSME Recovery

    Businesses can use invoice discounting to gain immediate access to funds held in outstanding invoices as well as to tap into the value of their sales ledger. It’s simple: when you invoice a customer or client, the lender pays you a percentage of the amount, increasing your cash flow.

    Invoice discounting is also referred to as a series of short-term business loans secured by invoices. In other words, the lender knows you owe them money and is willing to lend you the majority of it before your customer pays you.

    Small-to-medium-sized businesses’ cash flow may be stressed while waiting for clients to pay invoices. This problem can be solved by utilising invoice discounting.

    Businesses frequently run out of cash when they have outstanding invoices. Companies can use invoice discounting to gain a portion of the money right away.

    The procedure is straightforward: when you send an invoice to a customer or client, the lender matches a portion of the payment, increasing your cash flow.

    Another way to consider invoice discounting is as a series of short-term business loans backed up by invoices. In other words, the lender is willing to pay you the majority of what you owe them before your consumer pays you. MSMEs can access operating capital within 24 to 72 hours by bill-discounting their overdue invoices.

    The following is a list of important documents needed for invoice discounting.

    • KYC of directors
    • CIBIL record of directors
    • Address proof and PAN card of the company
    • GST registration certificate
    • Filed GST returns
    • Books of audited financials
    • Bank statement of the past 12 months
    • SSI or MSME businesses can apply for NSIC bill discounting by submitting the NSIC Bill Discounting Scheme Application Form along with the necessary documents to the relevant NSIC office.
    How do I apply for an MSME loan through invoice discounting?
    Obtaining an MSME loan through invoice discounting is simple and quick with KredX. You begin by signing up for KredX and submitting the required information. Following verification, you can upload any outstanding invoices to our simplified online portal. We have over 20,000 investors, and your invoices will be purchased before you know it. In 24-72 hours, you can receive up to 90% of your outstanding invoice amount.
    If your company provides goods or services to well-known corporations, you are eligible for an MSME loan through invoice discounting. You must share financial information as well as other relevant documents. It assists us in determining your company's creditworthiness. We also consider factors such as your company's visibility, active clients, turnover, and so on. We calculate the amount of the discount and your eligibility based on all of this information.
    Yes, banks can approve MSME loans up to Rs 1 crore. Before you can receive funding, you must first meet the eligibility requirements. Once approved, you will be able to obtain the working capital you require. The government acknowledged in the 2020 budget that a lack of working capital credit is a major issue for MSMEs. As a result, the RBI has launched a number of schemes to assist SMEs in obtaining bank financing.

    Bill Discounting Facility Service Fee

    • In addition to the interest charges, the minimum service charges will be 0.25% for the first 30 days and 0.08% per week after that, up to a maximum of 3% of the principal amount (i.e. the amount of invoice to be discounted). In the case of businesses with an NSIC-approved bill discounting facility, a commitment charge of 2% per annum on the authorised limit is collected in advance rather than a service charge in each transaction.
    • Service charges are reduced for units located in the northeastern region. The minimum service charge for units in the North Eastern Region will be 0.13% for the first 30 days and then 0.04% per week up to a maximum of 1.50% of the principal amount (i.e. the amount of invoice to be discounted). In the case of businesses located in the northeastern region that have an NSIC-approved Bill Discounting facility, a commitment charge of 1% per annum on the authorised limit is collected in advance rather than a service charge in each transaction.