Invoice discounting as a short-term investment option is attracting many investors by providing better returns and benefits than traditional options. Apart from banks, the service is also available on Fintech platforms like KredX, it has become easier for individuals to invest their money.
However, before moving on to how invoice discounting benefits retail investors, it is important to understand what it is. Also, it is important to find out why people are investing in invoice discounting on Fintech platform. Read further.
What Is Invoice Discounting?
An invoice vendor or merchant that raises on a client’s name is often not honoured immediately. It takes time. This creates a time lag between the supply of goods and the payments received for working capital management.
The vendors seek assistance from financial institutions to ensure this does not create a crunch in their business. A financial institution lends some money to the vendor against this invoice at a discounted price. The process is called invoice discounting.
Why Is Invoice Discounting On Fintech Platforms Attracting Retail Investors?
There are only a few risks in invoice discounting, like the payment risk of whether or not one will receive the amount. However, since many credible invoice discounting platforms like KredX offers this service, there is no issue of a payment default.
There are many more business perks available, like investors can choose to pay partially or in whole. Also, they can run a risk analysis carried out by the platform to get a score of how much risk a borrower holds.
What Are The Benefits Of Investing In Invoice Discounting?
The below pointers are also adding to the reasons why investing in Fintech platforms for retailers is beneficial:
Usually, investments take time to generate profit, but investing in invoice discounting is just a matter of 30 to 90 days. As soon as the tenure expires, individuals get the total amount they have invested along with considerable profits.
Verified Vendors And Enterprises
Only those vendors and enterprises can trade on supply chain finance platforms that are credible and have a trustable history. For this purpose, platforms also run necessary checks and carry out proper verification.
Invoice discounting has been considered a high-return investment in India as it usually records an above-market return of 12 to 20%. This is considerably higher than the return generated by investing in RDs (Recurring Deposits) and FDs (Fixed Deposits).
Integration Of Technology
Using high-tech investor apps like the KredX Invest app, investors can enjoy the seamless integration of technology in the investment process. As a result, investors can see the real-time status of the investments, take a snapshot of their portfolio and even surf the ongoing deals in the media.