Sales Invoice Discounting
Sales invoice discounting enables businesses to get immediate cash by selling their accounts receivable (invoices they’ve issued to customers) to a financial institution. It’s a useful tool to manage cash flow, especially when there’s a gap between delivering goods and receiving payments from customers.
How it works in detail:
A business delivers products or services to a customer on credit terms, typically 30 or 60 days to pay.
After delivering the goods or services, the business raises a sales invoice and sends it to the customer.
Instead of waiting for the customer, the business approaches a financial institution with the invoice
The financial institution provides an advance, typically around 70-90% of the invoice amount.
When the customer pays the invoice, the business settles its debt with the financial institution, which keeps a fee.
This solution helps businesses get instant liquidity, avoid cash flow bottlenecks, and meet day-to-day expenses.