The objective of a business and its customers in any industry are always in conflict. Businesses would want to receive funds immediately after their product or service gets delivered while their customers want to enjoy a credit period for as long as possible. If you offer friendly credit terms to persuade your customer, it means you will receive funds later and this creates a working capital gap within the organization that needs to be bridged. Having adequate working capital helps businesses expand as they can take on new market opportunities with additional funds on their hands. But conventional working capital products like Overdraft and Cash Credit Facilities provided by Banks require hard collateral and organized financial statements which might be difficult for small businesses. This is where a working capital finance solution like Invoice Discounting comes in. In Invoice Discounting a business can sell goods/services to their customers under an agreed credit period, invoice them and receive funds against the invoice. This invoice can be forwarded to a financing company such as Drip Capital which provides a collateral-free invoice discounting facility for exporters using an online platform where you can upload your invoices. Upon receiving the invoice, Drip Capital finances 80% of the invoice value within 24 hours. When the buyer makes his payment to Drip Capital after his credit period is over, it releases the remaining 20% of invoice value after deducting service and interest charges.
There are certain checks for export business to understand whether it needs Invoice Discounting. Do you want to extend flexible payment terms to your buyers? Does waiting for buyer's payments creates a cash crunch in your business? Are you credit limits from your bank is insufficient/exhausted and do you require more funds to grow your business? Do you want a fast & collateral-free solution? An invoice discounting facility provided by Drip Capital can take care of all these issues with ease and efficiency.
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