Invoice Finance: Know The Easy Way to Qualify and Apply

Invoice Finance
Invoice Finance

Be it in any industry, a business’ success largely depends on its financial management tactics. Most growing enterprises that deal with customers on credit terms face the challenge of maintaining a healthy cash flow. Invoice finance is one such means that provides them with the necessary funding to address immediate monetary needs or make timely payments to creditors.

Invoice finance refers to borrowing funds based on outstanding invoices that an enterprise will receive from its clients later. With this, owners need not wait for weeks or days to get their invoices paid. Instead, they can approach a lender to avail the majority of bill amount instantly. This type of short-term business loan adequately fulfils urgent liquidity needs based on unpaid invoices or bills. 

How invoice financing can help your company? 

Following are some of the advantages of availing invoice finance from reputed NBFCs in India.

  1. It provides easy access to high-value loans during emergencies. 
  2. Instead of chasing debtors, owners can emphasise on tapping into a different market or acquiring new clients. 
  3. These business loans are customised, and hence, offer a convenient repayment tenure. You can pay off in smaller EMIs also. 
  4. Reputed NBFCs offer Flexi Loan facility as well, where you can withdraw multiple times from a pre-sanctioned amount and pay interest only on the utilised fund. Hence, you can pay for urgent requirements and leave the remaining credit without accruing any interest on it.
  5. An invoice financing loan helps bring consistency in cash flow. You can, thus, cover expenses like employees’ payments, overhead costs, inventory purchase, capital expenditure, etc. 

Know how invoice financing works

One of the common options to finance a small business, invoice financing works in a simple way.  

  1. A seller (company) sells a service or a product to a customer (buyer).
  2. The company generates an invoice, providing a specific payment window for due clearance.
  3. However, due to insufficient cash flow, the seller cannot wait for the payments. 
  4. This is when the company can apply for this urgent business loan against the outstanding invoices. 
  5. Later, the borrower repays the loan over a predetermined tenure. 

Which is the easy way to qualify for an invoice financing loan?

While conventional financial institutions come with stringent terms and conditions, businesses can choose to apply for credit with a non-banking financial company. NBFCs bring easy-to-meet eligibility criteria which make qualifying for invoice finance hassle-free. Some of these include: 

  1. Business vintage – Must be a minimum of 3 years. 
  2. Age – Applicant should be within 25 – 55 years. 
  3. Nationality – Indian, residing within the country. 
  4. Borrower’s profile – Both self-employed non-professionals and professionals are eligible, including retailers, service providers, traders, chartered accountants, architects, allopathic doctors, etc. 

How to apply for invoice finance loan easily?

Once you qualify for an urgent business loan, the process to apply becomes easier.  

Step 1: Visit the lender’s official website 

Make sure to apply for credit through your lender’s official website only. 

Step 2: Application form

Enter whatever business-related and personal information are required in the online business loan application form. 

Step 3: Upload documents 

Lenders require a few essential documents to process a business loan. Attach all those accurately for verification and approval.  

Step 4: Wait for a representative’s call 

A representative of the lending institution shall contact you regarding the available loan offers. 

Step 5: Approval and disbursal 

Once verification is complete, the lender approves your loan instantly and disburses the fund to your account. You can start using the invoice financing credit immediately.

If you are an existing customer, a more convenient option is to avail a pre-approved offer.  These offers from NBFCs like Bajaj Finserv are customised for existing customers to make the process of availing a loan simplified and less time-consuming. Such schemes are available on business loans, personal loans, credit cards and a host of other financial products. You can check your pre-approved offer online by submitting a few details only.

Additional Reads: Managing personal finance and personal investments

Owing to the economic turmoil in 2020, many enterprises are unable to meet their payment obligations sufficiently due to cash flow issues. As Budget 2020 permitted NBFCs to sanction invoice finance to small businesses, you can avail the credit and strengthen your working capital strategically.