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Tata Capital > Blog > Wealth Services > What you Need to Know About Invoice Discounting

Wealth Services

What you Need to Know About Invoice Discounting

What you Need to Know About Invoice Discounting

It is a fact that assets can help generate cash. While the invoice lying on your desk is the receivable that will be realizable in its credit period, did you know that these invoices can also help in generating additional cash reserve for you? Invoice discounting is the way to go about it. To know more about invoice discounting, click here

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For every business, there is generally a credit period when it comes to their receivables. While customers tend to stick to the credit norms floated by the company, there are situations when certain clients do not clear the invoices on time. Which basically means that the invoices are stuck.

Too many stuck invoices, especially during the financial year-end or the start of the fiscal year can force SMEs to be short on funds. This can harm their reputation, employee morale and the basic cash flow of the company; which in turn may harm the potential growth opportunities that might come their way. This is where invoice discounting comes into play.

Invoice discounting is a form of a working capital loan. Invoice financing tends to act like a secured loan as financial institutions will keep your business’ outstanding invoices or bills as collateral. In this way, you can avail a fast advance of up to 80% of your pending invoice’s total value. If you are keen to avail this offer, you can click here to know more about nvoice discounting offering from NBFCs like Tata Capital.

So how do you go about availing bill discounting? Well, the process is simple. Before you start the process, you need to get an idea as to how many invoices still need to be cleared by your customers and the time frame for the same. Once you have a clear picture you can use those invoices to avail this working capital loan.

These invoices or bills will act as an asset against the applied loan and will be considered as collateral against the loan. Like working capital loans, you can use the funds for your daily business needs including improving cash flow and at the same time realize the maximum value of receivables stuck in unpaid invoices with eligible corporates while avoiding loans from banks.

NBFCs like Tata Capital offer competitive pricing based on the company’s credit rating (i.e. your buyer). You can now opt for invoice discounting from Tata Capital for vendors dealing with selected corporates.

If you need immediate funds, bill discounting can be the answer to your cash flow problems.