Introduction
Primarily, let’s understand what is meant by post-shipment invoice discounting. It refers to the process in which exporters sell their invoices to banks or financial institutions after shipping their goods. At a rate of discount, exporters will receive the invoice payment right after the shipment.
It helps to increase their cash working capital and mitigates risk. Why do you want to wait for 60 days when you have factoring companies right here? Customers may extend their dues or delay payment, but the factoring company now assumes the risk and responsibilities. To understand it better, read the below content for informative tips.
What is post-shipment invoice discounting?
The post-shipment invoice discounting is a method used by exporters to collect money for their sold goods. This method is applicable after shipment of goods and invoicing. The discount from the factoring company depends on the purchase and credit period. In fact, this process helps maintain liquidity and satisfies the customer, the business owner, and the factoring owner.
The Core Tips for Post Shipment Invoice Discounting
- Track the Payment
The tip to track the payment in post-shipment invoice discounting is to use the right ERP system for real-time updates. Make sure you get access to the dashboard to handle the overall performance of the customer and business. We often send polite payment reminders to the customer to ensure they follow the due date. Additionally, we set the alerts to ensure timely payment. These processes track the performance and engagement of the customers and the business owners.
- Eligibility Criteria
The eligibility criteria are to have invoice generation, compliance, exporter status, shipment completion and more. The tips for determining eligibility are to match the documents accurately, maintain records, and perform currency reconciliation. It is important to match the shipping documents with a letter of credit.
- Handling Right Credentials
The best practice for accessing post-shipment invoice discounts is to access control, logging, and monitoring with data integrity checks. In fact, using invoice numbers helps you to prevent errors. It is important to manage the right credentials during the post-shipment invoice discounting process because the financial documents must be signed and made official with the signature of both the factoring company and the business owner.
- Selecting Right Financier
There are financiers from banks, fintech platforms and NBFCs. Choosing what your business needs and your business requirements are is necessary. Next, try to compare the cost of financing from different financiers and then check the possible risk that you will face during the factoring process. These important tips will help business owners select the right financier.
- Negotiate Discount Rates
Negotiating discounts will enhance creditworthiness when stronger financials correspond to better rates. It also leverages the buyer’s credit profile and offers the right volumes for the business. Compare the offers all around the financial institutions to finalise the best discount rates and offers.
- Utilize Tech Platforms
Using technical platforms can enhance your business operations and make you streamlined with the right process. It also reduces cost and fosters funding speed. The usage of tech platforms includes digitising documentation, ensuring onboarding and integrating with ERP.
Benefits of Choosing Post Shipment Invoice Discounting
The advantages of choosing post-shipment invoice discounting include improved cash flow, reduced working capital methods, reduced credit risk, and increased export competitiveness. There are significant benefits to choosing post-shipment invoice discounting. There is no extra collateral required, and post-shipment invoice discounting has scalable financing.
Wrapping Up
The post-shipment invoice discounting is a product factor to enhance credit solutions and amplify cash flow. Transforming invoices and bills into instant cash is an ideal solution that can benefit all businesses. To benefit from empowering credit solutions, businesses must choose the most suitable fintech platform, such as Growmax Fintech. Choosing Growmax Fintech will make you risk-free and productive.