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The Difference Between Bill Discounting And Bill Purchase

Steady cash flow is critical to keep operations of any business enterprise running smoothly. Unsettled bills can often hinder the regularity of receiving cash or fund.

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The Difference Between Bill Discounting And Bill Purchase

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  1. The Difference Between Bill Discounting & Bill Purchase Simple | Fast | Reliable

  2. Introduction Steady cash flow is critical to keep operations of any business enterprise running smoothly. Unsettled bills can often hinder the regularity of receiving cash or fund. You can thus leverage the unpaid invoices in your books to secure funds immediately via bill financing. It’s a broad term with two primary subsets, bill discounting and bill purchase or factoring. Understanding differences is crucial to ensure that you seek the one most suitable for your business requirements. Copyright © KredX

  3. Bill Discounting A business leverages its invoices with a third party to avail cash advance at a discounted rate. Also, your customers or debtors would not know that the receivables are leveraged to avail credit. Thus, you retain credit control and a responsibility to collect payments from your customers/debtors.

  4. How Bill Discounting Works? You share the invoice details and corresponding bills with your lender. Your business’s credit controller then sets to collect payments from the debtors. When the invoices are settled, you repay the lender such a loan amount. Your business prepares invoices against the credit sale of goods or services. This institution assesses the invoices and provides cash advance at a discounted rate against their value.

  5. Bill Purchasing The business sells its in-arrear bills to a financial institution, called the factor, which provides cash advances at a discounted rate against such invoice value. The factor assumes credit control and the responsibility to recover payments from your customers/debtors. Thus, your business debtors know that you’ve leveraged their invoices with a third party to raise funds.

  6. How Bill Purchasing Works? Invoice is generated against the sale of goods and services on credit. When your customers or debtors clear up their payment, the platform forwards you the remaining 20% of the invoice value, minus the service fee or interest. You sell the bills to the factor. Such a lender then initiates the payment collection process. The financial institution analyses the invoices and provides a percentage, let’s say 80% of their value as a cash advance.

  7. Common Advantages: They provide access to instant financing without any collateral. Businesses can streamline their cash flow with ease and efficiency, especially if credit terms vary across clients. They do not encumber the finances of a business.

  8. Thank You Info@kredx.com www.kredx.com +91 8892043534 Delhi Bangalore Mumbai Simple | Fast | Reliable Apeejay Business Centre,6th Floor, Arunachal Building, 19 Barakhamba Road, Connaught Place, New Delhi - 110001 Ground Floor, Tower A, Salarpuria Softzone, Wing 'a, Outer Ring Rd, Bellandur, Bangalore - 560103 Wework, 14th Floor, 247 Park, Vikhroli West, Mumbai, Maharashtra - 400079

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