Many investors are okay with investing in stock markets for an extended period to maximise profit. However, some look to maximise profit within a short period. This discussion is for those investors who aim to invest in invoice discounting to obtain higher returns in a short period.
Nowadays, many credible Fintech platforms like KredX are offering this service, making it simpler to invest. If you are an interest investor read along for a detailed comparison of invoice discounting vs stock market investment, what invoice discounting is and how it works!
What Is Invoice Discounting And How Does It Work?
Invoice discounting comes under the short-term investment option, in which individuals invest money to provide it to companies who need it to maintain their working capital. This money is paid against an invoice that companies issue in their customers’ names whenever they make a sale.
However, to complete this transaction, Fintech companies play an essential role since they offer a common platform for investors to find companies that need discounting.
Invoice Discount Vs Stock Market Investment: How Is It More Profitable?
Investing in invoice discounting is more profitable in the following ways.
Independent Of Market Influence
Many stock market investment options, like digital gold, directly depend on the market and its performance. However, this is not the case in invoice discounting investments. The products in which individuals invest are already supplied with proof of sale completion in the face of invoices.
So, if any discounting or investment of discounting invoices takes place after this process, it is free of market intrusion.
Short-Term Investment Option
Unlike stock market investments like bond investments, individuals do not have to stay invested in invoice discounting for years. One can expect a return including their principal amount with added profit in just 30 to 90 days.
Further, to keep increasing the profit, investors can reinvest this whole amount and multiply it.
Safer For Investors
In invoice discounting, minimal risk is involved since the Fintech platform, like KredX, runs multiple rounds of verification to find only genuine invoices that companies have raised. In addition, vendors who supply goods also run a separate round of verification on the background of the blue-chip companies and corporations they are going to deal with.
So, there will be no cases of payment defaults. However, there is no such guarantee available in the alternative investment option. The stock market is highly volatile, and there is no guarantee of getting the money back.
Invoice discounting investment offers a unique opportunity for investors to get a chance to earn above-market returns. In fact, one can even expect to earn 12-20% annualised returns.
Analyse Risk With Technology
Using specific platforms like the KredX invest app allows investors to analyse the risk of borrowers before investing. The platform sets the score against each enrolled borrower after analysing multiple stages. This service will not be available when investing in the stock market.
By the comparison made above on invoice discounting vs stock market investment, it has been clarified that the former can be beneficial if an investor seeks a short-term investment option. Additionally, it also helps investors earn more returns, play safer with the use of simplified technology.
However, comparing the benefits depending on individual requirements is always advisable before investing.