What is invoice discounting and how does it work?
1.When unpaid invoices of companies are sold at a discounted value to financers or investors to generate cash flow, it’s known as invoice discounting.2.Platforms such as Jiraaf, KredX, Tyke, TradeCred, Leaf Round provide invoice discounting as an investment product to their investors.
3.The investment horizon for invoice discounting is typically 30 to 120 days.
4.The investors have an opportunity to make a high return in the short term.
5.There are risks of delay or default in payment, making this a high-risk, high-return product.
Content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.
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(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
This story originally appeared on: India Times - Author:Faqs of Insurances
