Updated on: Feb 10th, 2022
3 min read
Small businesses find it difficult to manage their invoicing cycles, resulting in unfavourable working capital. Invoice discounting enables business owners to receive quick business loans by offering cleared invoices as collateral.
Invoice discounting is a process through which a business can leverage its accounts receivables for availing financing for short-term requirements. While invoice discounting is becoming quite popular for raising fast cash, it’s good to know the benefits of invoice discounting before you look to borrow credit.
Invoice discounting enables businesses to streamline their cash flows and maintain favourable working capital. It’s not a substitute for capital loans. Hence, funds from invoice discounting should be employed for working capital and short-term growth objectives instead of capital investment and asset development.
Invoice discounting is essentially a mode of financing followed to ensure the extensive use of the company’s due amounts. Invoice discounting can help businesses manage their cash flows more proficiently if done well.
I preach the words, “Learning never exhausts the mind.” An aspiring CA and a passionate content writer having 4+ years of hands-on experience in deciphering jargon in Indian GST, Income Tax, off late also into the much larger Indian finance ecosystem, I love curating content in various forms to the interest of tax professionals, and enterprises, both big and small. While not writing, you can catch me singing Shāstriya Sangeetha and tuning my violin ;). Read more
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