Welcome to the Care.fi Resource Centre!
Introduction to Invoice Financing
In today’s blog, we’re going to
simplify Invoice Financing.
As you can tell from our previous
blog,
businesses use many techniques to optimize their cash flow and improve their
working capital position. Some of these techniques are initiated by the supplier of goods and
services, while the buyer can initiate others. Invoice finance is one such technique.
Invoice Discounting refers to a collection of ways to monetize outstanding invoices. Invoice
discounting is one method of invoice financing we offer through our innovative platform -
CareCred.
Invoice discounting is a simple process where a seller borrows funds from financial institutions
based on their outstanding invoices. This allows the sellers to take early payment in return for a
discount – meaning that sellers can put their surplus
cash to work and earn a risk-free return. The business gets the loan to fulfill its short-term
liquidity needs, and this process eases the cash flow.
Need an example? Sure! Let’s head back to the players in the supply chain we visited in our last two
blogs – FeelWell Hospital and their supplier, Med-Suppliers Ltd.
Supplier has provided FeelWell Hospital with some pharmaceuticals and is
now ready to
raise an
invoice. However, the Med-Supplier
needs the money quickly, and the 90-day payment period requested by FeelWell isn’t quick enough.
So, after Med-Supplier raises the invoice for the goods, they turn to
CareCred.
CareCred, powered with its underwriting engine LIRA, takes a 3-planked approach to
underwrite the
Invoices uploaded at CareCred. Leveraging 40+ data points covering Med-Supplier, Invoice Raised
&
Feelwell Hospital, the transaction is approved.
CareCred lends an amount that is almost equal to the total value of the invoices to Med-Suppliers,
minus a small percentage which we can call the ‘discount.’
Once the credit period is Over, CareCred receives the full payment directly from Feel-Well Hospital.
And that’s it! You can logon to
CareCred to get funding against your invoices.
***
Still have questions? Reach out to
info@carefi.in and we’ll be in
touch with you
soon.💡