Invoice Factoring: How it Works & its Advantages for SMEs

Working Capital Finance Without Collateral to Grow Your Exports

What is Invoice Factoring?

One of the fastest and easiest ways to offset the impact of outstanding account receivables on your cash flow is by selling your export invoices at a discounted rate to a factoring company like Drip Capital. In exchange, you get upto 80% of your export invoice value on the day of shipment, rather than waiting for the complete payment from your buyer at the end of the credit period. Drip Capital, the factor, takes over the responsibility of collecting payments from your buyers so that you can focus on your business. Once the credit period is reached, the buyer pays the full amount to Drip Capital and you get the remaining 20% minus the factoring fees. This is called Invoice Factoring, sometimes also referred to as Invoice Discounting or Bill Discounting. Drip Capital’s Invoice Factoring solution helps bridge the credit gap between small and large enterprises by making it easier for an SME to gain access to export finance without the need of any hard collateral or business financials. Our factoring product is designed in a way that lets SMEs immediately release their working capital from foreign trade transactions and utilise the funds at any stage of the business lifecycle, to pay for inventory, raw materials, employees, or any other short-term needs. This is a non-recourse factoring solution which means that if the buyer defaults on any invoice financed by us, the obligation to pay back the amount does not fall on the exporter as all the financed invoices are insured.

Why Invoice Factoring?

Are you an SME exporter? Have you extended a credit period to your foreign buyers? Do you often wait for buyer payments? Is your bank’s restricted credit facility limiting the growth of your export business? Do you want a financing solution for your working capital needs that is fast, paperless, reliable, transparent and collateral-free? If you have answered yes to any of the above questions, you need invoice factoring to get that competitive advantage. Here’s how our non-recourse invoice factoring product can help you grow your export business.

INVOICE FACTORING ADVANTAGES

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Offer flexible payment terms to your foreign buyers


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Get a line of export credit over and above your bank’s credit facility


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Maintain a positive cash-flow


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Easier and faster access to working capital

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Never wait for buyer payments

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Reduce your dependence on bank loans

Why Choose Drip Capital

We are a fintech company focused on solving the working capital problem for emerging market SME exporters by leveraging data and technology. We are re-building core parts of international trade finance infrastructure to level the playing field for small businesses

Collateral free working capital

Collateral free working capital

Fund your exports growth using your foreign trade receivables.

Credit limit up to $2.5 Million

Credit limit up to $2.5 Million

Get post-shipment export credit line up to $2.5 million.

Competitive pricing

Competitive pricing

Cost of export financing can be as low as 0.7% per month basis credit evaluation.

Paperless, swift, transparent

Paperless, swift, transparent

Use Portal by Drip Capital for faster fulfilment and end-to-end service

Receive cash advance against your trade receivables

Apply Now

Quick facts on Drip Capital

Trusted by more than 1500 Exporters and Importers Globally

$500 M

of Trade Financed


400+

Exporters


70+

Cities


60+

Countries

Our Partners

eepc
chemexcil
fieo
svb
wells-fargo

Growth Stories

Learn about how we’ve 10xed exporters

Tatva Enterprise LLP

Exporter of Plastic products from Maharashtra

We started factoring our export invoices with Drip in FY17-18 and by 18-19 we were getting almost 25% of our invoices financed by them. With the boost in working capital and increased competitiveness in foreign markets because of better terms of sale, our turnover has shown a substantial increase.

Hiral Parikshit Pawar
Promoter, Tatva Enterprise LLP
7x Increase in Turnover
USD millions
Al Sami Agro Products

Exporter of frozen foods from Andhra Pradesh

As an exporter you may have a great offering, but without easy access to short-term finance, you face challenges in scaling and have to let go of many opportunities. Drip Capital’s easy and efficient export finance solution has helped us ensure there is continuous cash flow in our business. Now we can convert possibilities which we otherwise would have passed on. The result has been a 220% jump in sales in FY19.

Abdul Salam
Promoter, Al Sami Agro Products
3x increase in Turnover
USD millions
Satya Impex

Exporter of Red chillies from Andhra Pradesh

When we started our business in 2017, traditional lending institutes could not keep up with the increasing orders from our buyers. With Drip capital fulfilling our working capital requirement, in FY 19 our business reported massive growth as compared to the previous year, over 75% of those export invoices were financed by Drip.

Thota Rama Krishna
Promoter, Satya Impex
75% wallet share
USD millions
Pari Agro Exports

Exporter of Basmati Rice from Punjab

Drip’s factoring service has ensured that our liquidity doesn’t remain tied up in invoices for a long time. Since the start of our collaboration, we have been able to cater to more buyers and our export turnover has increased 4x between FY17-18 and FY18-19.

Varun Sachdeva
Promoter, Pari Agro Exports
4x increase in Turnover
USD millions

In the news

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Tech Crunch
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Experience the power of export financing with Drip capital

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You’ve got questions…. We’ve got answers

How is invoice factoring different than a bank loan?
How long do you take to process an application for invoice factoring?
Do we have to pay extra for the credit insurance?
Do I have to factor all my export invoices from Drip Capital?
Looking for more questions?View All

Invoice Factoring Resources

Export Finance - Why is it required and Types
Export Finance - Why is it required and Types

August 28,2019

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Invoice Factoring: Easy Access to Working Capital for your Business
Invoice Factoring: Easy Access to Working Capital for your Business

October 31,2018

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Government Loan Schemes to Finance your MSME Business
Government Loan Schemes to Finance your MSME Business

January 22,2019

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