What is Bill Discounting? (1)

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Bill Discounting

• MYND FINTECH PRIVATE LIMITED (Mynd Fintech)

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What is Bill Discounting?
Business Discounting is one such choice, which
permits a business to get fast installment for
their work and meet their working costs without
relying upon any outside organization to give the
assets. Bill Discounting, likewise called
Invoice Discounting, is an exchanging action
where a seller sells a few goods or services to a
buyer. The buyer needs to make the installment
according to the concurred credit time frame.
Presently, assuming the buyer needs cash before
that, he can move toward a bank or some NBFC and
'sell' that receipt to them. The monetary
establishment gets the receipt confirmed by the
buyer and afterward makes installment to the
seller for their benefit. In any case, they make
a few derivations, called 'markdown', as their
bonus.
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BENEFITS OF BILL DISCOUNTING Bill discounting,
as a monetary exchange, is valuable to every
party involved - the seller, the buyer, and the
monetary institution.The particular advantages
of bill discounting are as per the following

1. Improves cash flow position  All organizations,
   large or small, rely upon income to make due and
   develop. Bill discounting office infuses a speedy
   income into the business and help the
   organizations survive and flourish. The money
   received quickly may be used to pay salaries,
   procure raw material for the next order, or
   invest in some new asset.
2. Provides instant access to cash For a seller, a
   bill discounting helps business to get quick and
   hassle-free way of getting payment for their
   invoices. It helps them manage their working
   capital better and keep the working capital cycle
   less. Most financial institutions like MYND offer
   funds within 24 to 72 hours.
3. No collateral involved Bill discounting, as a
   process, is very easy. It does not need much
   documentation. The seller is not required to
   provide any collateral security to receive the
   funds. The invoice itself is quite enough
   collateral to receive the funds.
4. No debt incurred Getting funds by the bill
   discounting process does not put the buyer in
   any debt kind of situations. In this, the buyers
   get money against the invoices, which is anyways
   due to them. It simply assists them with getting
   the cash. Thus, it doesn't make any debt risk for
   them. Compared to traditional financing process,
   a bill discounting process is protected from any
   sort of misfortunes or harms.
5. No impact on business sheet Bill discounting
   process does not create any tax liability. It is
   more of an off-the-book process. Thus, it no
   affects the balance sheet of the business.

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BILL DISCOUNTING PROCESSThe step-by-step
process of bill discounting is given below

• A seller sells goods or services to a buyer and
  creates an bill.
• The buyer accepts the bill. This acceptance means
  the buyer acknowledges the bill and promises to
  settle the bill on the agreed time.
• The seller goes to the banks or financial
  organizations to get the bill discounted.
• The financial organizations checks the credit
  worthiness of the buyer and the authenticity of
  the bill.
• Once bill get approved, the bank dispenses the
  funds to the seller after deducting the
  pre-defined fee, discount, or appropriate margin.
• Thus, the seller receives a quicker payment for
  the bill, which can be utilized for other
  business purposes.
• Toward the finish of the original credit time
  period, the buyer makes the installment to the
  financial organizations..

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BILL DISCOUNTING VERSUS BUSINESS LOAN
S.NO Parameter Business Loan Bill Discounting
1 Requirement of Collateral Collateral Required Not Required
2 Processing Time Long. Normally required weeks Fast within 2-3 days
3 Suitability Usually taken for long term needs Suited for short-term needs
4 Mode Normally manually Completely digital
5 Document Process Lengthy Complex Simple required criteria
6 Eligibility Criteria Very strict Simple
7 Impact on Balance Sheet Considered a debt. hence, impact the balance sheet Off the book process. Hence, No Impact on balance sheet
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CONCLUSION

• All businesses required cash to do their business
  activities. Compared to business loans, bill
  discounting is a great option to get funds, as
  the process is very easy and does not generate
  any kind of liability.
• Working with a reputed financial partner
  like MYND Fintech helps the business find the
  funds at a reasonable discounting. With declining
  interest rates, more and more MSMEs are opting
  for business discounting as a preferred method of
  financing their short-term funds requirements.

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Thank You

• MYND FINTECH PRIVATE LIMITED (Mynd Fintech)    
• Address 2nd Floor, 288-A, Udyog Vihar IV,
  Gurugram,         Haryana - 122001
•   Contact no.  91-124-4646000
•   Email hello_at_myndfin.com