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Trade Finance - Discounting

Invoice discounting and cheque discounting products are becoming increasingly popular. These products are used globally by companies to improve their cash flows, especially for SMEs facing late payments and squeezed finances. SAMAA FINANCE has been providing financial solutions to various industries over a decade, offering facilities ranging from lease financing, invoice discounting, cheque discounting. Invoice discounting, and post dated cheque discounting, allow you to unleash the value of your sales receivables ledger, thereby unlocking the potential of your current business, and facilitate future business growth and expansion. It also helps in better management of sales ledgers and assist in collection activities.

Trade Finance - Discounting

1. Invoice Discounting

What is Invoice Discounting?

Invoice discounting allows a business to draw money against its sales invoices before the customer has actually paid. To do this, the business borrows a percentage of the value of its sales ledger from us, effectively using the unpaid sales invoices as collateral against the borrowing.

Key Features of Invoice Discounting

  • Sales Ledger (Receivables) Management
  • Reduce Administrative Costs
  • Improve receivable turnaround
  • Improve accounting
  • Generates MIS specific to buyers – reconciliation time is reduced

Collection of Receivables (Dunning)

  • Follow-up on payments by buyers
  • Reminder service to buyers in case of delay in payment
  • Pick-up service from buyers’ door step a possibility

Financing/Funding (Prepayment) against Invoices

  • Elimination of long billing cycles
  • Flexible cash flow to meet working capital requirements
  • No new debt created – preservation of key financial ratios
  • Scope for additional business and payoff of suppliers

Benefits of Invoice Discounting

  • Finance up to 90% of the value of Receivables
  • Credit Period is aligned with the debtor’s payment cycle
  • Credit primarily based on the quality of receivables and paymaster
  • Off-balance sheet borrowing, keeps the key financial ratios better
  • Releases cash locked in receivables
  • No collateral security is required
  • Debt collection service is provided
  • Regular MIS reports specific customer wise
  • Credit and Collection functions outsourced

2. Cheque Discounting

What is Cheque Discounting?

Cheque Discounting is a short term financing mechanism. The client provides postdated cheques to the financial institution issued by their customer which are discounted and funds are dispensed immediately. It is the most convenient way of conversion of instant payment from long awaited receivables.

Benefits of Cheque Discounting

  • Finance up to 90% of the value of Receivables
  • Credit Period is aligned with the debtor’s payment cycle
  • Credit primarily based on the quality of receivables and paymaster
  • Off-balance sheet borrowing, keeps the key financial ratios better
  • Releases cash locked in receivables
  • No collateral security is required
  • Debt collection service is provided
  • Regular MIS reports specific customer wise
  • Credit and Collection functions outsourced

Key Advantages

  • Improves cash flow without creating new debt
  • Fast access to working capital
  • Professional receivables management and collection support
  • No additional collateral required
  • Flexible and scalable as your sales grow