Project report for Invoice discounting/ Bill discounting

Executive Summary

97% of the SMEs in India experienced late payment on the Invoices. 56% of Indian MSME are dealing with working capital issues due to the late payment on their invoices.  Invoice discounting is a source of working capital finance for the seller of goods on credit. Bill discounting is an arrangement whereby the seller recovers an amount of sales bill from the financial intermediaries before it is due. Such intermediaries charge a fee for the service. This practice of discounting bills globally is much more prevalent than we think and has been a recognized mode of alternative financing in the ...

Opportunity - Problem & Solution

The financial services landscape in India is largely controlled by banks and NBFCs. The role of private banks has been crucial and the government’s role in issuing new banking licenses to the likes of Yes Bank, Kotak Mahindra Bank, and Axis Bank was an important inflection point. However, there is still a huge gap between demand and supply of finance, especially for small and mid-sized companies. Of course, lending against collateral is one way to solve it, but the time to disperse fund and availability of collaterals, are always a burden to MSME vendors and small service business to regulate ...

About the service

The firm is planning to be a successful aggregator in the invoice discounting market. The company plans to be in an online platform but the resource crunched small vendors don't have time or knowledge to sit and fill the online forms in detail. So the offline presence is a key in this market. The firm will do all the manual verifications and documents needed and also completes the invoice certification. Also, the firm is focusing only on infrastructure and construction projects. So from this, it is clear that the company wants to drill down to the niche market and capture the specific ...

Market potential

Medium, small and micro enterprises (MSMEs) operate on tight margins and need an immediate settlement of invoices to avoid the shortage of working capital. However, due to the poor bargaining capacity of MSMEs, their working capital often remains blocked in receivables as they work on an unfavorable credit cycle for goods and services supplied to corporate buyers. This problem is exacerbated due to the existence of a huge funding gap for MSMEs. In order to bridge the gap between invoice date and its due date, invoice discounting emerged as a financing solution for entities which are unable to ...

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