How Mynd Fintech Bill Discounting Helps Small Businesses

When it comes to developing an emerging economy, small and medium-sized enterprises (SMEs) play a vital role. These small businesses are instrumental in generating employment and contributing to the social and economic development of the country. However, in today’s challenging times, one of the biggest obstacles faced by budding entrepreneurs and small businesses is not just the need for business ideas but also the consistent availability of funds. This is where bill discounting becomes a valuable financial tool. By utilizing bill discounting, SMEs can access immediate funds by selling their trade receivables at a discounted rate to financial institutions, ensuring a regular cash flow and overcoming the financial constraints that often hinder their growth and expansion.

Being new or small players, they need help getting bank loans and often have to rely on internal funds or borrow funds from friends and family to launch and initially run their businesses. In such cases, even if they use their money to start the business, they need a regular inflow of funds to sustain the business, meet their operating expenses, and grow their business.

In such a scenario, SME owners must search through various financing options that suit their requirements and budget.

What is Bill Discounting?

Luckily, today’s small business owners have many financing options. Among the various financing options available to small businesses, bill discounting, or invoice discounting, is becoming very popular these days. 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, when a business needs funds to manage operating expenses or procure fresh orders or machinery. It can approach a bank or some NBFC and ‘sell’ that invoice to them. After verifying the invoice from the buyer, the financial institution makes payment to the seller after making a deduction, called a “discount”, as its commission.

The most significant benefit of bill discounting is that the business gets funds against their invoices, which 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

Mynd Fintech’s bill discounting solution helps small businesses tide over their financial requirements cost-effectively and smoothly. It allows vendors with an excellent financial track record to get an unsecured line of credit from Mynd Fintech. The facility enables qualifying vendors to discount their invoices, get quick access to funds to meet their immediate requirements, and pitch for future orders to grow their business.

Bill Discounting Process: 

Below is a 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 buyer’s creditworthiness and the bill’s legitimacy.
• 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 on Mynd Fintech

The salient benefits of bill discounting are as follows:

• Improves cash flow position:
  

  Bill discounting helps inject 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.

• One-Time Credit Limit Set-up:
  

  Mynd Fintech fixes a credit limit and credit period based on the risk assessment of each vendor. Once this process is done, the rest process is simple. The vendor onboarding process is completely digital.

• Quick access to cash:

   Bill discounting is a hassle-free and quick facility for sellers to get paid against 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. Mynd Fintech offers funds within 24 to 72 hours. These funds are transferred to the seller’s designated bank account.

• No collateral is involved:
  

  At Mynd Fintech, we respect the vendor and his business reputation. Therefore, once the risk analysis successfully completes and establishes the credit limit and duration, the seller receives funds without requiring collateral as security. The invoice itself acts as collateral to get the funds. This means you do not have to put up any papers or collateral as a mortgage.

• 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. This, in turn, helps increase the limit as well as get better interest rates.

• Flexible repayment:
  

  Mynd Fintech now offers funds quickly and the vendor’s flexibility when it comes to repayment. Mynd Fintech offers flexible repayment terms of up to 120 days for the payment of an invoice. The vendor may also choose to make the payment before the due date.

NACH (the clearing house) presents the invoice for collection when the payment is due. After every successful payment, NACH replenishes this limit.

• Complete control over credit position: While Mynd Fintech offers you complete flexibility in securing the funds as and when required, it also gives you complete control over them. As and when required, a vendor may ask for a customized Statement of Account (SoA) and reconcile it with his books of accounts. This regular reconciliation ensures there is no difference in the account statements.
• Digital flow that makes the process easy and convenient: The entire process is digital. Mynd Fintech works with a state-of-the-art technological platform that offers quick and easy integration with vendors’ ERP. It allows the MYND Portal to seamlessly flow invoice information across the vendor, Mynd, and the lender. If ERP integration is unavailable, the system allows uploading digitally signed invoices.

Conclusion:

Just as a human needs oxygen to survive, every business needs a regular inflow of funds to survive and grow. In today’s competitive scenario, when buyers have the upper hand, sellers have a challenging task ahead. Producing goods or services is a relatively easy task; with good selling and marketing skills, you can also find buyers. But where small businesses get stuck is getting timely payment for their invoices.

That is where Mynd Fintech comes in. The invoice discounting feature allows the sellers to get a quick payment for their invoices, much before the due date, at a nominal cost. The seller may then utilize these funds to make quick payments to its vendors, get early payment discounts, pay salaries, or even buy raw materials or machinery to pitch for further business and grow the company.