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A steady increase is being noted in the number of enterprises meeting working capital needs and improving cash flow position by availing credit based on vendor bills or sales invoices. A lot of small business owners ask what is invoice discounting and benefits of vendor bill discounting. Unlike conventional business loans, vendor bill discounting enables entrepreneurs to avail credit quickly based on value of unpaid invoices.
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A steady increase is being noted in the number of enterprises meeting working capital needs and improving cash flow position by availing credit based on vendor bills or sales invoices. A lot of small business owners ask what is invoice discounting and benefits of vendor bill discounting. Unlike conventional business loans, vendor bill discounting enables entrepreneurs to avail credit quickly based on value of unpaid invoices. There are a number of lending institutions that provide credit ranging from 75% to 95% of the value of unpaid invoices. Also, some lenders enable business owners to avail credit within 48 hours by discounting unpaid invoices. There are also a number of reasons why many entrepreneurs prefer invoice or vendor bill discounting to conventional business loan products.
Benefits of Vendor Bill Discounting Quick Access to Credit Often small business owners explore ways to avail credit without lengthy credit appraisal process. The lending institutions consider several factors before providing credit to small businesses. But vendor bill discounting, unlike business loans, does not require borrowers to meet strict credit requirements. The business owners can avail credit quickly by discounting their unpaid invoices. There are even a number of lending institutions that provide make credit available to entrepreneurs within 48 hours based on value of unpaid invoices.
No Need to Pledge Assets as Collateral As highlighted by several studies, small businesses and startups often find it challenging to access credit. Many lending institutions even require small business owners to pledge personal or business assets as collateral to avail secured business loans. Vendor bill discounting enables entrepreneurs to avail credit simply by discounting their unpaid invoices. Hence, it becomes easier for small business owners to avail credit without pledging any asset as collateral.
Release the Locked Cash Unlike term loans, vendor bill discounting does require business owners to make monthly repayments. The entrepreneurs can avail a lump sum amount of money based on the value of unpaid invoices. At the same time, business discounting enables business owners to convert their current assets like unpaid invoices or goods received notes into liquid assets. The entrepreneurs can even meet immediate financial needs by unlocking the cash stored in the form of unpaid invoices.
