Invoice Discounting Explained
Have you ever found yourself in a situation where your payment from one order is delayed but at the same time there are expenses for other orders that just keeps coming?
Any trader that has spent enough time in the game has faced this simply because the market works more on credit than cash. Keep in mind that just because this happens often doesn’t take away the problem.
In comes the solution called “Invoice Discounting”.
The best way to understand this term is to see it as a type of loan. While most loans we know of require assets as guarantees, invoice discounting on the other hand works based on valid invoices.
Why would you choose Invoice Discounting?
- Fast Access
The process summed up works in two simple steps: You show the invoices, and you get your money earlier. This is exactly why it works best for businesses that need capital as soon as possible. Alternative Financiers usually have the funds that are readily available to be assigned and do not need to go through the hefty procedure of normal banks. This ultimately allows the client to receive their money much sooner.
- No collateral involved
As previously mentioned, there are no assets you as a business need to put down as collateral before receiving your money. This eliminates the risk of losing your assets if the deal goes bad. In other words, you as the business owner have nothing to lose.
- The processing is extremely fast
The main reason why bank loans take too long in this instance is that your application must join a long queue, and then there is a huge amount of paperwork that needs to be done.
On the other hand, with invoice discounting from alternative financiers only a few proofs and the necessary invoices are all you as the business owner need to provide before you get your money in a short period.
- Extremely efficient
Invoice discounting allows you as the business owner to get the funds with minimal waiting time and paperwork while maintaining the confidentiality of the arrangement. This means that you always have the capital readily available without wasting any time and effort, and without putting any assets on the line of risk.
Invoice Discounting in the government sector
The South African government receives thousands of invoices from SMEs all over South Africa that has completed purchase orders. It is common for these businesses to have to wait a while before the government makes payment and often, they really can’t afford to wait that long. ProfitHub specialises in Purchase Order funding in South Africa and now also helps SMEs with Government Invoice Discounting.
Contact ProfitHub today if you would like your invoice to be paid for earlier.