How Mynd Fintech’s Bill Discounting Solutions Can Help Small Businesses

When it comes to developing an emerging economy, small and medium-sized enterprises play a very important role. These small businesses not only generate employment but also help in the social and economic development of the country. However, getting finance is one of the biggest obstacles to the growth of small businesses. They don’t get bank loans easily and often have to rely on internal funds or borrow funds from friends and family to launch and initially run their businesses.

What is Bill Discounting?

Among the various financing options available to small businesses, bill discounting, or invoice discounting, is becoming very popular these days. So, it allows small businesses to get quick payment for their work and meet their operating expenses without having to depend on any external agency to provide the funds.

Under bill discounting or invoice discounting, when a business needs some funds to manage its operating expenses or procure fresh orders or machinery, it can approach a bank or some NBFC and ‘sell’ that invoice to them. Hence the financial institution, after verifying the invoice from the buyer, makes payment to the seller, after making a deduction, called ‘discount’, as its commission.

The biggest benefit of bill discounting is that the business gets funds against their own invoices, which in a way is their own money. However, it helps them get that money much before the due date, which helps them manage that crucial period easily. Thus, small businesses get funds at much lower costs without involving much time and documentation.

Mynd Fintech’s Bill Discounting Solutions

Features and Benefits of Mynd Fintech’s bill discounting solutions, such as fast access to cash, competitive rates, and flexible repayment terms)

Mynd Fintech’s bill discounting solution helps small businesses tide over their financial requirements in a cost-effective and smooth manner. Given below is the step-by-step breakdown of the entire process. 

• A seller sells some goods or services to a buyer and raises an invoice.
• The buyer approves the invoice and promises to make the payment on the due date.
• The seller approaches Mynd Fintech to get the bill discounted; who first verifies the creditworthiness of the buyer and the legitimacy of the bill.
• Mynd Fintech deducts the pre-decided fee or margin amount and releases the funds to the seller.
• This helps the seller get paid against the invoice. This money can then be used for other business purposes.
• At the end of the original credit period, the buyer clears the invoices and pays Mynd Fintech.

Benefits of Bill Discounting

The salient benefits of bill discounting are as follows:

• Improves cash flow position: Bill discounting helps inject a quick cash flow into the business, which helps it survive and flourish. The funds received, well in advance, may then be used to fund operating expenses like paying salaries, procuring raw materials, or investing in some new asset.
• Provides quick cash: Bill discounting is a hassle-free and quick facility for sellers to get paid against the pending invoices and is almost as quick as getting payment on delivery. This reduces their working capital cycle and helps them manage their working capital better. Most financial institutions like Mynd Fintech offer funds within 24 to 72 hours.
• No collateral is involved: Bill discounting, as a process, is very simple. It does not involve much documentation. In addition, the seller gets funds without any collateral security. The invoice itself acts as the collateral to get the funds.
• Competitive interest rates: As you use the facility more and more and the lender gets its payments on time, the lender’s faith in your business also increases. Then you can get more funds at competitive rates and make yourself financially strong.
• No impact on the balance sheet: Bill discounting facilities do not create any tax liabilities. It is more of an off-the-book process. So, this does not impact the business balance sheet.

How to Apply for Mynd Fintech’s Bill Discounting Solutions

Eligibility Criteria:

The eligibility criteria for bill discounting vary from lender to lender. At Mynd Fintech, the eligibility criteria for bill discounting are listed below:

• The company should have been in business for a minimum of 3 years.
• The seller should have dealings with at least 2 investment grade companies in the past. 
• The credit score should be at least 650 or above.
• The business must have a minimum turnover of Rs. 1 crore.

Documents Required for Bill Discounting:

Some of the common documents required for approving bill discounting include:

• A duly filled application form with passport-sized photographs.
• Business PAN card and address proof
• IT returns and financial statements with an audit report.
• Applicant’s Aadhar card
• Business establishment proof
• Last 12 months’ bank statement
• Bill of Exchange
• Letter of Credit
• Commercial Invoice
• Packing list with all the details
• Details of dispatch along with a copy of the delivery challan, if any
• Documentary proof of company registrations, licenses, and permits, if any

Once the documents are in place and all the formalities are done, Mynd Fintech releases the payment within 24 to 72 hours.