This article was first published on Stories by Populous World on Medium
Small and medium businesses often work with customers from large or commercial corporations. SMEs act as a supplier or vendor to these larger business entities and hence dependent on the buyer for maintaining consistent working capital.
Similarly, the customer that buys from SMEs is also dependent on them for timely delivery of goods and services. Also, the SMEs present a cash flow challenge for the larger business with their unorganised invoicing, which results in inclusion of payment terms in the contract which so affects the SMEs and leaves them with little or no working capital for operating expenses.
How Invoice Discounting can fix this problem?
To fill the working capital crunches, invoice discounting can help businesses with better working capital management. If you are a small supplier to a large firm, you can get paid early with invoice discounting services. Similarly, if you own a large business, you can extend your payment terms without compromising your operations at the supplier’s end by paying them early with invoice discounting and at the same time conserving working capital for expansion and growth.
What Invoice Discounting offers:
1. Control / Speed: SMEs can sell their outstanding invoices to obtain cash/working capital as and when they need to. Furthermore, the cash is processed quickly can be advanced within 24 hours.
2. Flexibility: The ability to raise different amounts of funds, whether it be a large or small sum and at any time to suit a company’s needs at that particular point in time. You can also pick and choose which invoices you want to finance, you don’t have to submit your entire ledger.
You only pay for the finance as and when you use the invoice discounting limit. It is not like a working capital loan of a term loan, which requires you to pay EMIs every month ...
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Stories by Populous World on Medium