Getting paid early will allow you to maintain your cash flow and meet your daily expenses, taxes, etc.
What is invoice discounting?
Invoice discounting consists of applying a reduction to the tax base (the cost before taxes of the product or service we sell) as long as the malaysia number whatsapp customer pays the amount before a certain period.
Nowadays, many companies are used to paying their invoices in 30, 60 or even 90 days. However, this practice has a great impact on the economy of small businesses that need liquidity to meet their regular payments.
Invoice discounting is a technique that helps reduce these deadlines and also attract new customers.
Benefits of invoice discounting
In addition to the advantages we have mentioned, the discount on invoices serves to:
Reinvest resources more quickly and generate new businesses.
Negotiate payment terms better with clients.
Reduce administrative costs related to collection.
Increase the customer base attracted by discounts.
Agility to pay suppliers and, in turn, negotiate discounts for prompt payment with them.
Accelerate business growth through investment.
Difference between advance and invoice discounts
Another very common financing system is invoice advances , which have nothing to do with invoice discounts.
An advance payment consists of a bank or financing entity advancing you the money for each invoice you issue.
That is, they pay you the amount and then charge you when the client pays. For this service, they logically take a commission for each invoice.
The main difference between one system and the other is that with the discount you negotiate directly with the client and charge them directly, without introducing intermediaries.
Although invoice advances may be an option from time to time, depending on the company's liquidity needs, it is always better to negotiate with the client and avoid commissions and intermediaries.
