Invoice Discounting & Receivable Financing
Documents Required
- Current invoice or Purchase Order
- Top 10 Customers and their yearly sales
- Bank Account statements of last 2 years
- Monthly GST returns of the previous 2 years
- KYC Doccuments of the Borrower
- Audited Financials and ITR returns of 2 years
- Sales ledger for last 1 year
- Collateral sale deed (for secured lending)
ReaLoan Philosophy
Trustworthy Individuals
With high integrity and the intention and capacity to reimburse us.
Reliable Companies
Business with clear and consistent cash flows.
Reliable Buyers
Long and stable relationship with buyer improves approval rates
What is Invoice Discounting/ Receivable Financing?
A small business in India needs to critically manage its cashflows. A sufficient buffer in cashflows can ensure that small businesses can thrive in uncertain times. Invoice discounting also known as receivable financing or sales bill discounting, is a very short-term working capital financing vehicle. It allows small businesses to leverage their outstanding invoices to secure cash flow by taking loan against these invoices. It provides instant liquidity to cover their operational expenses, gear up for an upcoming sales season or any other expenses.
The Benefits of Invoice Discounting
Improved Cash Flow: One of the most significant advantages of invoice discounting is the immediate infusion of cash into your business. Rather than waiting for payment, you receive a sizeable portion of the invoice value upfront, helping you maintain a healthy cash flow to meet your day-to-day financial commitments.
Working Capital Flexibility: Invoice discounting gives you the flexibility to manage your working capital efficiently. You can access funds when needed, whether it is to cover payroll, invest in inventory, or take advantage of supplier discounts for early payments.
Quick Access to Funds: Traditional financing methods can be time-consuming and involve extensive paperwork. Invoice discounting, on the other hand, offers a streamlined process. You can often get approval and access funds faster, allowing you to respond quickly to emerging business needs.
Maintaining Customer Relationships: Invoice discounting is a confidential financing method, which means your customers may not even be aware of it. You maintain control over your customer relationships and collection processes, preserving your business’s reputation.
Scalability: As your business grows, so do your financing needs. Invoice discounting is a scalable solution. The more invoices you generate, the more funds you can access, making it an ideal choice for businesses on a growth trajectory.
Is Invoice Discounting Right for Your Business?
Invoice discounting can benefit a wide range of businesses, particularly those that deal with B2B transactions and have outstanding invoices. It’s an excellent choice if:
- Your business experiences seasonal fluctuations in cash flow.
- You want to take advantage of growth opportunities without waiting for customer payments.
- You need more certainty in your business cashflows. It ensures smooth business operations.
- You prefer a financing solution that doesn’t require collateral.
We understand the complex business relations, the urgency of funds to satisfy short-term obligations, and provide customized service as an invoice discounting facility to assist small businesses like yours with their short-term requirements. We are committed to providing our customers with the best possible service and support. Our staff of experts is always accessible to address your concerns and maximize the utility of our Partner’s invoice discounting facility. Contact us immediately to find out how we can assist you in achieving your goals.
How Invoice Discounting Works?
Invoice Generation
You provide goods or services to your customers and issue invoices as usual.
Invoice Submission
You submit the invoices to an invoice discounting service provider or financial institution.
Loan Approval
The provider evaluates the invoices and approves a certain percentage of their total value for immediate funding.
Loan Disbursal
You receive the approved funds, typically within 24 to 48 hours, which you can use to meet your business needs.
Repayment
Within the stipulated duration, whenever your customers clear the bills, the lenders deduct their share and return you the remaining amount.
Inmprove Cash Flow and Maintain Client Relationship
FAQs
What is Invoice Discounting?
Invoice Discounting (also called Bill Discounting) is a short-term working capital facility where a business receives instant funds against its unpaid customer invoices.
Instead of waiting 30–120 days for payment, the lender advances 80–95% of invoice value upfront.
Who is eligible for Invoice Discounting?
Eligibility depends on the credit strength of the buyer, not just the seller.
Typically eligible:
MSMEs supplying goods/services to large companies
Businesses with 6–12 months banking history
Sellers with regular invoices to reputable buyers
GST-registered businesses
NBFCs and Banks prefer invoices raised on:
Large Corporates
MNCs
Listed Companies
Government / PSU buyers
Blue-chip enterprises
What is the minimum turnover required?
Indian banks and NBFCs usually require:
Minimum ₹20 lakh to ₹50 lakh annual turnover (small-ticket)
₹1 crore+ turnover preferred for continuous discounting programs
What credit score is required for Invoice Discounting?
CIBIL score of the seller should ideally be 650+.
However, Invoice Discounting relies heavily on the buyer’s creditworthiness.
If the buyer is a strong corporate, lenders may accept lower seller CIBIL scores.
How much funding can a business get against an invoice?
Banks/NBFCs generally fund:
80% to 95% of invoice value upfront
Remaining amount is paid after buyer pays (minus fees/interest)
What is the loan tenure for Invoice Discounting?
Tenure depends on invoice credit terms:
30, 45, 60, 90, or 120 days
Repayment happens once the buyer clears the invoice.
Is collateral required?
Usually No.
Invoice Discounting is unsecured, because the invoice itself acts as the primary security.
Banks may ask for:
Undertaking from buyer
Escrow arrangement
Personal guarantee in some cases
NBFCs are more flexible.
What documents are required for Invoice Discounting?
Common documents include:
GST Registration
Udyam Certificate (optional but helps)
KYC of business & promoters
Bank Statements (6–12 months)
ITR (1–3 years)
Copy of invoice(s) raised
Proof of delivery (E-way bill, receipt)
Purchase order / contract
Buyer confirmation (if required)
What are typical interest rates?
Interest rates vary depending on seller/buyer risk:
Banks: 9% – 14%
NBFCs: 12% – 24%
Charges often include:Discount rate
Processing fee
Account management fee (NBFC)
Does the buyer need to be involved?
Options depend on lender policy:
With Buyer Confirmation: Required by many banks; safer for lender
Without Buyer Confirmation: NBFCs often allow this, based on seller’s track record
TReDS Platforms: Buyer must confirm digitally
What is TReDS, and how does it help MSMEs?
TReDS (Trade Receivables Discounting System) is an RBI-approved platform where MSMEs can discount invoices to corporates and receive competitive rates from banks/NBFCs.
Benefits:
Better transparency
Lower interest rates
Faster settlement
No collateral required
Major platforms:
RXIL,
M1xchange,
Invoicemart.
What industries commonly use Invoice Discounting?
Manufacturing
FMCG
Pharma & Chemical
Packaging & Printing
Logistics
Traders & Distributors
IT/Software Services
Industrial supply chain
Exporters (Export Bill Discounting)
What are the common reasons for rejection?
Weak buyer credit profile
Disputed invoices
Frequent payment delays from buyer
Poor CIBIL score of seller
Insufficient banking history
Overdue GST or statutory filings
Negative financials or returned cheques
Can a startup use invoice discounting?
Yes — if:
They sell to large corporates
Have clear proof of delivery
Have clean and verified invoices
Buyer is creditworthy
NBFCs are more open to offering this facility to new businesses.
How fast is the disbursal?
NBFCs: 24–48 hours
Banks: 3–7 working days
TReDS: Often same-day or next-day
Once the seller is onboarded, future invoices are usually discounted instantly.
Borrower Testimonials
