SMEs dealing in exports often face liquidity crunch, which makes it difficult to finance day-to-day business operations. Under such circumstances, availing the services of export bill discounting from a reliable financial institution can be of great help. Such a facility can aid exporters in covering transient or short-term business expenses, besides bringing the goals of trade expansion to fruition.
Discussed below are the intricacies of the export bill discounting facility along with some key benefits of this service.
1) What is Export Bill Discounting?
2)Features of Export Bill Discounting India
It is rather difficult to break into the business of exporting and gain a strong foothold. This particular forte of business requires continuous investments in various segments. Failing to do so might lead to stagnancy. A lack of access to sufficient working capital further adds to problems. In this scenario, export financing comes as a boon for many.
Export financing is of two broad categories, namely bill discounting and bill factoring.
Among these two, export bill discounting can be crucial. It is a form of funding service that financial institutions extend to businesses such that they can easily expedite multiple operational costs. This also helps business-owners make investments in key markets to expand the scope of their exporting enterprise.
With KredX, business owners can avail cash advances against their unpaid invoices within 24 to 72 hours*. Thereby, individuals can easily maintain sufficient cash flow in their business and meet daily operational costs without any hassle.
In international trade, bill discounting services are quite common. These facilities are provided by lenders to help exporters and small business owners in this trade to avail cash advances on the raised but yet-to-be-paid bills. This can also be conceived as a form of a letter of credit which the financing company uses in order to determine the export bill discount.
Thus, the exporter can avail quick funds and continue to meet his/her business’s daily working requirements without much trouble.
Another key feature of export bill discounting is that the business owner does not have to secure any company asset to avail the service. Thus, individuals do not require to mortgage, hypothecate or pledge any of their assets for such discounting services.
International trade services are extremely stringent, and so are the financial processes associated with them. The same also applies for export bill discounting in India. Prior to a business availing such a facility, the owner and buyer must agree to the bill discounting contract. One the contract has been agreed upon, the financial intermediary will issue the payment to the business and collect the same from the buyer on a predetermined date.
As such, the business owner might be able to negotiate better with the buyer and conveniently expedite the entire payment process through bill discounting services.
Exporting goods to other countries requires finances to fund several processes simultaneously to ensure efficient business operations. Therefore, if one is looking to expand his/her exporting business and branch out to multiple other markets, it will be ideal to opt for export bill discounting services from a suitable lender.
Elucidated below are the essential benefits of a proper export bill discounting facility.
Businesses often face a situation, wherein their buyers request an extended period to discharge payments after the goods are out for export. This can lead to a financial crunch for the enterprise if bills continue to remain unpaid. However, with a reliable bill discounting service, businesses can acquire sufficient capital against the raised invoices or export bills. This also offers the much-needed credit extension period to the buyers as well.
The worst consequence of insufficient working capital in export business is a resulting dearth in cash flow which deters the availing of more orders. This can cause small export businesses to remain stagnant. Under such circumstances, bill discounting can be a saviour by offering cash advances against the export bill. Thus, exporters can run all business operations smoothly, invest in inventory and take up more export orders from foreign buyers.
Export bill discounting brings a host of advantages, the most prominent ones being that it is collateral-free and negates the need to depend on banks. The business owner simply needs to send out the goods for export, raise the invoice and avail the facility.
Being one of the leading integrated cash flow solutions providers, KredX provides working capital against unpaid invoices within 24 to 72 hours*.
Since export bill discounting in India makes working capital management convenient and hassle-free, it is easy for the business owners to focus on regulating cash flow and expanding the scope of the enterprise.
Exporters also have the convenience of choosing the currency that they want to deal in. Thus, instead of waiting on international banks and bodies to clear bills, business owners can enjoy advance payment with bill discounting and extend the credit period to the buyers.
Thus, export bill discounting is an exceptional financing option for those dealing in the competitive and cut-throat business of exports. They can opt for this facility to ensure steady cash flow and adequate working capital management.
A. While export bill discounting services apply to shipments with no Letter of Credit, negotiation comes into the picture when shipments are under Letter of Credit.
A. Export bills are a collection process that an exporter leverages. The exporter sends these bills to foreign buyers to collect them.