It is a process of discounting of accounts receivables generated out of sale.
The Seller assigns to the discounting bank/NBFC the accounts receivables arising out of sales to buyers and receives payment there against to the extent of 80-90% from the bank/NBFC, depending upon the credit terms.
Receivables Finance forms part of Working Capital required in the business.
Typically beneficial to meet firm’s operating expenses.
Predictable cash flows linked directly to performed sales.
Readily convert cash receivables to cash as the pre payment is provided immediately.
Quick turnaround time ensures incremental cash flow planning & management