Invoice discounting is quite popular because one can invest for a short period of time and get a stable return of 10 to 13% with moderate risk. As we know, every investment option, such as the stock market, mutual funds, index funds, etc., contains risk, and its investors risk appetite allows them to opt to diversify their portfolios based on trend analysis. Invoice discounting is less risky than share markets and mutual funds and provides a higher return on investment compared to fixed deposits. The best part of choosing invoice discounting as an option is the liquidity and short period of maturity.
How Invoice Discounting Works ?
Based on the above example, whenever any invoice is presented by a supplier to a company after the supply of goods and services, it usually takes 60 or more days to get the payment received from the company to the supplier. In such scenarios, the supplier needs to wait, and there are always challenges in managing working capital as cash flow is not being used to pay salaries or other expenses. If Rs 10 lakh worth of raw material is supplied, the supplier used to connect with the bank to get the amount instantly, and the bank charged approx. 2%, which is Rs 20,000.
So the bank used to give the invoice amount after taking or deducting 2% charges based on the contract and authentication of the invoices issued by the supplier. In reply, banks get payment from companies after an agreed-upon tenure-based contract note. Now, based on this model, we, as individual investors, have no option to invest in invoice discounting as no valid platform is available to provide services.
TradeCred is the online platform that acts as a bridge where individual investors and retail investors like us now have the option to invest money in invoice discounting and get approx. 10–13% in a short span of time (3–4 months) with moderate risks, which is less compared to the share market and more than fixed deposits. It helps companies raise short-term capital from individual or retail investors like us. Since its origin, TradeCred has had a zero default record as it is well managed by experts. Tradecred doesn't own the money in its account; it's in an escrow account managed by ICICI Bank.
Benefits of Investing via TredCred on Invoice Discounting
There are some limitations and risks associated with invoice discounting, such as delay in receiving payment, legitimate invoice knowledge, Companies may pay less to suppliers owing to faulty goods delivered, which may impact the rate of return. It is always advised to do trend analysis and market studies before investing in any investment options. Investors need to invest in big brand invoices like Amazon, ITC, etc. as these big giants have good creditability and the chances of default are very low compared to new companies.
For investing in Invoice Discounting investor needs to first get themselves registered via TradeCred - https://buy.tradecred.com/
Step 1: Click on above link and select create account option and opt INVESTOR as an option, click continue to proceed.
Post account creation, investors will have the option to add money via UPI, NEFT, and IMPS. Investors need to invest in deals available on the dashboard. Adding money does not mean that amount gets invested, as deals need to be made. Deals can be cancelled within 7 days of investing without any additional charges or costs.