Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
Basic features of the scheme are as follows.
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Bill Discounting is structured working capital finance solution that includes finance against receivable / Book Debts of your company. So it allows you to convert your accounts receivable / Book Debts into cash and thereby cash generating potential of your business.
Basic Requirement of Bill Discounting Facility
Benefit of Bill Discount Facility
Factoring is a flexible alternative to traditional forms of funding. It allows you to respond quickly to changes in market conditions and matches your cash flows with your business requirements, thereby facilitating increased production and sales. It is also a financial option for the management of receivables. In simple definition it is the conversion of credit sales into cash. In factoring, a financial institution like Bank (factor) buys the accounts receivable of a company (Client) and pays up to 80% (Some time Up to 90%) of the amount immediately on agreement. Factoring company pays the remaining amount (Balance 20%-finance cost-operating cost) to the client when the customer pays the debt to Factoring Company on due dates. Collection of debt from the customer is done either by the factor or the client depending upon the type of factoring. The account receivable in factoring can either be for a product or service. Examples are factoring against goods sold, factoring for construction services (usually for government contracts where the government body is capable of paying back the debt in the stipulated period of factoring. Contractors submit invoices to get cash instantly), factoring against medical insurance etc.
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