Invoice Discounting
For Investors

Invoice discounting is the practice of using a company's unpaid invoices to raise working capital & fulfil its financial needs. Traditionally, financial institutions including banks and NBFCs have been discounting invoices for MSMEs. Invoice discounting involves transfer of rights on an asset (invoice) from the seller (i.e. business) to the financier (i.e. investor) at an agreed value.

KredX provides a marketplace/platform for business owners to sell and investors to purchase invoices raised on blue chip companies. Investors looking to invest money for a short term (30-90 days on an average) can earn attractive returns on their investment by purchasing these future cash flows. It combines the best in class technology experience with credit underwriting & data analytics capabilities to create a brand new investment asset class.

Register yourself with us on our website as an investor and we will help you park your investments in this unique asset class with varying maturity periods at an attractive risk-adjusted rate.

As of now you can invest a minimum of INR 3 lakhs per deal. This has been set to ensure that you have sufficient liquidity to invest in an alternative investment class and the required risk appetite for the same.

Signing up on KredX is very simple. SImply provide your contact details on our website and our relationship managers will contact you to complete the registration process. As a part of our KYC norms, we will need a small set of documents to ascertain your investor's status. Once those documents are received and vetted, you will receive an email from us notifying you of your account post successful onboarding.

Log into your netbanking/mobile banking app > Click on Add Payee > Select Other Bank Accounts > Enter the details > Save/Confirm the same.

Note: ICICI bank account holders are requested to add the escrow account as an external bank account.

KredX provides a technology platform to connect sellers of invoices and investors and execute transactions between them. KredX provides certain tools, for example - credit report of the seller, enterprise report (blue-chip company) among others - to make a calculated investment decision.

KredX does not guarantee any fixed return to its investors and the investment would be subject to the traditional market risk associated with invoice discounting. Please refer to the various reports made available on the platform during deal purchase for details.

No, as an investor, you can decide on the amount you would want to invest in any invoice. You can either fund partially or fully an invoice.

Tenure of the investment is linked to the invoice payment date. Every invoice will have a different maturity period. We have seen that historically it has ranged from 30 days to 90 days.

Invoice Financing is a very niche product in the asset based financing arena. It carries minimal undue risk while generating superior return on investments. In advance economies, it has emerged as a major form of investment. KredX's Invoice Financing platform ensures a higher short-term yield for its investors. Our conservative and ever evolving risk management policies minimizes the risk of investing for our investors. Our experience in MSMEs financing space helps us in catering only to the lowest risk segment within the space.

KredX is a ISO 27001:2013 certified private entity that deals with secure information from our clients. The ISO certification is further validation of the high standards we follow.

We have an established due diligence process in place backed by manual verification of the parties. We are also very selective in choosing the people with whom we do business.

The borrowers are obliged legally to pay back the amount owed to the investors irrespective of whether the invoice is paid by their customer. In the remote case of a default by the customer, we will facilitate legal help for them and will provide assistance in recovering the loss. We have also tied up with various collection agencies to recover the amount due from the business in case of default

Any investment comes with its own associated risk. The risk could be total capital erosion. However, we have taken several steps to mitigate the risk – both strategically and operationally:

1. Comprehensive risk management framework – Detailed credit analysis of sellers and their financials at onboarding

2. Verification process - Invoices are verified physically. Moreover, invoices are restricted to only blue-chip companies.

3. Strong legal framework – All sellers are required to sign our legal agreements to ensure our investors are well protected.

4. If a blue-chip company does not pay the invoice money in the future – the small business is still liable to pay the money owed to the investor.

5. If the small business collapses, the blue-chip company would still pay the invoice money and this will be paid directly into the escrow account which will be transferred to the investor.

6. KredX is a tech platform and it does not assume any credit risk on behalf of the investors.

The KredX business model is one where investors do not face any execution risk. Our 360° credit risk analysis system takes place at multiple stages.

Business-Onboarding Stage We follow a three-pronged approach that is dependent upon the business, the enterprise and their relationship to arrive at a KredX Score for every business.

Business:

1) Credit credentials (Credit reports of company and individual reports of directors)

2) Financial Health & Stability (All financial and company documentation)

Enterprise:

1) Credit Rating of Enterprise

2) Fundraising Ability

3) Liquidity

4) Market News

1) History of working relationship

2) Payment timeline

Legal mechanisms such as undertakings, bills of exchange, review of legal proceedings and Board for Industrial and Financial Reconstruction (BIFR), etc. involving the vendor and the enterprise.

Verification of every invoice before listing on the platform

KredX monitors the security of every transaction through Escrow Accounts (in collaboration with ICICI Bank) for both Businesses and Investors, separately.

In addition to this, all the important data points after evaluation by the KredX risk team are summarised in different reports at the vendor, enterprise and deal level.

KredX in collaboration with their partner bank has facilitated opening of an escrow account for each individual member. All transfer of funds happen through these escrow accounts. In case of liquidation of KredX due to any financial/legal reason, money in a member's escrow account will be returned to the respective owners immediately. Money involved in the process will not be transferred to KredX's account at any stage (except service fees and government taxes, etc.).