Invoice discounting (or receivables financing) helps businesses access cash quickly from unpaid invoices.

Yes, invoice discounting is legal in India.

Invoice Discounting can be profitable for both businesses and investors.

Capital raised by discounting invoices forms a part of working capital finance, which is essential to build, grow and run the business. Hence, this is the go-to form of raising working capital.

When businesses provide credit periods of a few weeks to a few months to clients, the company could look to raise funds through discounting invoices during this period to get cash flows that could be deployed back for more critical business needs. The funds raised are essentially a part of the working capital.

• Sales Invoice Financing (SIF) – A seller approaches the financier to discount the invoices raised by them on the buyer/customer and requests the financier to pay him upfront on behalf of the Buyer.
• Purchase Invoice Financing (PIF) – A buyer approaches the financier to discount the invoices raised on them by the seller and requests the financier to pay the seller on his behalf.

Invoice Discounting is also known as bill discounting or bill financing.

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