Invoice Discounting

Invoice Discounting is an age-old practice, commonly known as hundi in India, used by businesses to raise funds for short- term working capital needs by selling their bills receivables to financial institutions at a discount. This allows businesses to unlock their cash from the bills receivable and manage their working capital requirements.

Invoice discounting is an investment instrument where the incidence of execution risk is minimal. The investors invest in service as an asset that has already been executed and has an invoice already raised against it. Invoice discounting is a process in which a business sells an invoice to a third party, usually called a financing company.

By selling their invoices, businesses can get quick access to cash, improving their cash flow and working capital cycle. This offers investors a unique alternative investment from a brand-new asset class with healthy portfolio diversification at above-market returns and minimal risk in a short time frame. Invoice discounting provides a great investment option while protecting yourself against market volatility while reaping high returns.