Invoice Financing in India
Early payment in India
Mostly big companies pay after at least 60 to 90 days from the date of invoice. Businesses cannot afford this delay. They might be unable to process their next order due to the shortage of funds. This is where supplier finance in India comes in role. It is also known as vendor finance.
Vendor finance is a simple process of invoice discounting in which a vendor or a business secures the payment from a third party or financier on behalf of its invoice. In return for this payment, the financer keeps some part of the payment as an early payment charge. It is a kind of loan which is far better than an actual bank finance. Bank finance requires a lot of formalities and paperwork, apart from all these banks also require a collateral. This is not the case in supplier finance, the invoice acts as a collateral here and helps the business in procuring a secure finance. The discount or the fee charged is about 10 times less than the other traditional financial solutions. It is a quicker process and helps the vendors in maintaining the flow if businesses. Shortage of funds does not act as a barrier for small businesses in this model.
It is also beneficial for the buyers or the businesses which the vendors are doing with as it helps in maintaining a reputation of a reliable business partner. The buyers are able to fulfill their financial obligations without using their own money.
Payable Financing in India
This type of dynamic discounting in India has become a popular financial model in today's world proving to benefits to all the three parties involved the buyers, the sellers, and the financers. Small and medium businesses are adopting this technique because of the easy cash flow and less of paperwork. Through this technique, the buyers can extend their payment date and the supplier can get cash for the business, both at the same time. There many companies which provide vendor finance in India and many small and medium businesses are opting for their services to reap the benefits of early payment.
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