10 Best Invoice Discounting Platforms In India

There are numerous options for investment available in India, and invoice discounting platforms have brought a novel investment tool which is gaining crazy popularity among investors these days. Historically, although it has always been conceivable, it was a lack of means for the people to be able to invest in invoice discounting platforms until a few years ago.

Invoice discounting is not a novel concept in India as banks handled it in the past. However, what catches the attention is that now, ordinary investors have been increasingly allowed to participate. The co-founder of wealth and investment management fintech firm Orowealth, Mr Vijay Kuppa says that one of the key criteria for evaluation by an investor is the trustworthiness of the business delivering the payment ultimately at a later time.”

A business may obtain money using invoice discounting as this financial service can essentially act to replace payday loans and bank overdrafts. a firm can finance approximately 70 to 100 per cent of outfit overdue sales bills while sustaining a seamless cash flow for the applicant so they can pay off debts or finance upcoming projects.

In this article, we bring the top invoice discounting websites in India to you

Before we dive into the list, we first need to quickly define what’s invoice discounting. A company can obtain short-term funding from banks and other financial institutions based on its outstanding invoices through the practice of invoice discounting. This helps businesses with their short-term financing in order to cover their urgent cash needs.

Invoice discounting has been said to be a successful replacement for financing businesses as the banks will accept the firm’s unpaid invoices and send them to the company, all in exchange for up to 90% of the total amount owed. In order to be able to comprehend what invoice discounting is, it’s important to learn the nuances of business payment first.

How Do Bills Get Paid?

Approximately about 90% of the businesses’ transactions are carried out through deferred credit agreements in form of bills receivable etc instead of direct cash payments. What happens is that merchants or retailers issue exchange vouchers for purchases and sales which are then recognised after a certain amount of time. This bill of exchange is a negotiable instrument within the realm of the Negotiable Instruments Act of 1881.

Consider, an example where you run a paper company and sell the paper produced to another company that creates copies. You will hand the paper to the company to draw up a bill which will then be submitted for approval. This issued invoice becomes a bill payable for the other party and a bill receivable for you as soon as the manufacturing company gets it. You’ll receive your money in between 30 to 90 days, depending upon the conditions of payment and the payment plans are different for different companies.

What Does Invoice Discounting Mean?

The invoices received from the clients of vendors or merchants are honoured after a set amount of time. This leads to a lag between when goods are delivered and when the payment for them is made. By visiting any participating bank or any other financial institution, vendors can offer to sell the aforementioned bill receivable for less money upfront and bridge this gap of time. This process through which companies can get money for immediate usage using their accounts receivable is called “invoice discounting.” MSMEs invoice big firms for the goods or services provided (blue-chip enterprises).

According to Anurag Jain, founder and executive director at KredX (an invoice discounting platform), clients bring their invoices to these platforms for invoice discounting services. It’s here that they are converted into funds and transferred to the businesses of those clients within 1-2 days at a discounted rate, one which is determined by the risk assessment, market acceptability, as well as duration ( ranging from 30-120 days).

For example, let’s assume that you owe Rs. 1 lakh to a copy-making business for the paper you supplied. As per their policy, they’ll honour the invoice after 90 days, blocking this amount for you for the next 90 days. To mitigate the situation, you go to a bank and present this bill for, say, Rs 90,000 in cash to them. The bank will want to get Rs 1 lakh from the paper manufacturing business after 90 days and pays you immediately right away for the services you rendered. The bank here earns Rs 10,000 which becomes their profit.

In an online marketplace with thousands of vendors offering their wares, whenever a purchase is made the payment is processed quickly but the firm provides the sellers with a credit period of 90-day before they’re paid. The operating capital of the vendor is hence tied for 90 days. But if he/she needs money to support the business, he/she can seek alternate financing that neither takes a long time nor involves a lot of paperwork. This is where these vendors use invoice discounting.

How Can Small-Scale Investors Participate in Invoice Discounting?

Platforms like KredX, Orowealth, and TradeCred, have made invoice discounting conceivable by considering the risks and various other factors. The minimum amount required for investment varies for invoice discounting platforms and sometimes can be as little as Rs. 50,000.

Invoice discounting platforms help bridge the gap between trustworthy companies and suppliers where financiers are looking to make profits. In order to get hold of the working capital, businesses can use invoice discounting platforms to post their outstanding bills. Investors then, in turn, provide these businesses with quick funding in exchange for a return within 30 to 90 days on their investment.

Any business that can comply with the basic predefined KYC requirements like a PAN card, a valid Indian address proof, etc. can invest. This includes residents who are individuals, proprietorships or HUFs registered in India, institutional investors, banks, NBFCs, or some other financial institutions. It can also include NRIs.

There are numerous invoice discounting platforms that offer this service. We’ll look at the top 10 invoice discounting platforms in India:

1. Invoicemart

The automated Trade Receivables Discounting System (TReDS) helps small, medium, as well as big enterprises to overcome the limitation posed by the capital crunch. These are essentially what has played a key role in the development of Invoicemart. Formed from a collaboration between Junction Services and Axis Bank, it can only be used by MSMEs. Since its beginning in 2017, it has helped several MSMEs sell online, their receivables. However, over time, it has collaborated with banks, small private businesses as well as non-bank financial institutions but not with common investors.

2. KredX

One of the leading invoice discounting platforms, KredX can help businesses with their invoice financing needs. KredX helps individuals, companies, and other organisations achieve their financial goals with a variety of invoice discounting services and solutions. Manish Kumar’s creation follows a fully paperless procedure which aids in generating large profits at lower risks. You can see profitable returns with KredX in as little as 30 days.

KredX has been instrumental to help a number of Indian businesses, as well as SMEs, by providing them with cash flow solutions. They provide paperless investment solutions to enable investments in cutting-edge ideas that fuel large profits with very small risks. At the same time, invoice discounting platforms help you get the money within 30 to 90 days.

This invoice discounting platform also helps with portfolio diversification by enabling you to spread risk over a variety of businesses. With KredX, you get a guaranteed return annually of about 12-20 per cent. You can also lower the risk by investing in approved banknotes with KredX.

3. M1xchange

One of the most well-known and best-rated trade receivables systems is from M1xchange. This platform can be a literal lifesaver for MSMEs and small suppliers in times of financial crunch. The RBI has granted Treds permission to offer these services as an invoice discounting platform for financing trade receivables for MSMEs from different lenders and businesses.

The supplier should upload the invoice and share it with the client for approval. That’s when M1xchange authenticates upon approval that the financier can make a bid. The supplier can choose the highest offer after the submission of bids and decide whenever they’ll pay.

4. Receivables Exchange of India Ltd. 

The National Stock Exchange (NSE) and the Small Industries Development Bank of India (SIDBI) have successfully formed a joint venture together, called The Receivables Exchange of India Ltd., or RXIL. The RXIL complies with all Reserve Bank of India standards and utilises all TReDs platforms in accordance with these. The abidance of the RBI norms makes sure businesses flourish in a sustainable environment that facilitates the overall expansion of the MSME sector.

5. Priority Vendor

Priority Vendor RXIL is an invoice discounting platform which is a joint venture between the National Stock Exchange (NSE) and the Small Industries Development Bank of India. It is a receivables exchange for MSMEs (SIDBI). RXIL works in conformation with all the regulations of RBI and operates such that the development of MSMEs in a sustainable environment on all TReDs platforms is ensured.

6. Star Vendor

Like Priority Vendor, this invoice discounting platform is a completely online cloud-based programme that helps in bill reduction, thanks to AI. However, only the invited businesses have access to the bills. Various financial institutions and companies like T.V.S., Dabur, Godrej Consumer Goods, and Whirlpool, to name a few, work with Star Vendor. The suppliers that work with these companies are eligible and can benefit from invoice reduction.

7. A.T.R.E.D.S. (Invoicemart)

This invoice discounting platform is a cooperation of MJunction Services and Axis Bank. They utilise the web portal invoice-mart to communicate with lenders as a representative of MSME suppliers as well as corporate customers. This invoice discounting platform is collateral-free financing that helps MSMEs overcome various capital crunch situations.

8. Falcon Group

This invoice discounting platform in India is an established P2P invoice discounting platform. It helps connect investors with well-known companies to help investors have access to borrowers and to get loans without worrying about default situations. Falcon invoice discounting platform also helps to increase the returns for investors as it gets rid of intermediaries like commercial banks, depository institutions, etc., in contrast to banks and financial organisations.

9. Fintech systems

The clearing is one of the private invoice discounting platforms. This platform has adopted entirely paperless procedures with focus on onboarding vendors quickly. It also provides a number of invoice discounting funding options through banks and markets. Businesses can hence store their surplus capital on fintech platforms while getting higher returns than with the conventional financial products.

10. Banking systems

Banks are another invoice discounting platform that provide invoice discounting services to their most significant commercial customers. Here, the banks act as financiers to directly to their clients instead of having any intermediaries or platforms onboard. The financing choices that they provide their customers are often customisable and promptly helps satisfy their working capital demands.

Choosing the Discounting Company that Best Suits Your Invoice Needs

There are numerous companies with their particular advantages and characteristics that are invoice discounting platforms. Whilesome offer more comprehensive services, others are focused on specialities. Businesses specialising in invoice discounting offer a variety of services, like invoice factoring, invoice financing, payment plan discounting, and invoice management, to name a few. This helps decrease the price of your bills while increasing your cash route.

It is a wonderful cost-cutting strategy as it helps businesses cut down their costs while doing away with all the unnnecessary paperwork and expenditures. Their focus is entirely on their main business activities which saves all the time that goes into manual processing. It also significantly cuts down the running costs as there’s minimal reliance on manual processing, which in turn significantly decreases operating expenditures for business. It does so as they no longer need to waste time that they did on administrative tasks like data entry and printing.

There’s in earnings and sales as the need for manual processing is eliminated, which frees up the accountants’ time to delegate the duty to team members more skilled at the task. As a business owner, you should be aware of the invoice discounting system works and which supplier best fits your financial goals and operational requirements.