Invoice Factoring Solutions for Growing Indian Businesses
Learn how simple factoring instruments can help your business address working capital issues
About Factoring Services in India
Although factoring as a service has been around for a long time in India, it has only recently started gaining popularity as an alternative to traditional ways of securing finance against trade payables. A factoring service is an arrangement wherein a company sells their trade receivables to a third-party financial institution or a bank (the factor), which is also referred to as a Bill Purchase Solution. The first factoring solution was introduced in 1991 by SBI Global factors. Today, trading and manufacturing companies can choose between several bank and non-bank entities for their factoring requirements.
Why Choose a Factoring Service?
As opposed to traditional ways of securing working capital finance, bill factoring or invoice factoring solutions have a few distinct advantages. Firstly, they're much quicker. Growing companies in India can expect disbursements directly into their account in a currency of their choice within as little as 24-48 hours. Secondly, since a factoring solution involves a direct transfer of risk to the factoring company, it is far less risky for the seller who can focus on the core areas of the business instead of worrying about getting paid. Lastly, a good factoring company with a strong global presence acts in an advisory capacity; due to their global expertise that spans several industries, they can advise companies on the best course of action.
How to Choose a Factoring Service?
Sellers in India should seek out some basic criteria for qualifying factoring agencies. For one, the agency should have a global track record and expertise so they can navigate international markets seamlessly and work with your buyer without any hassles. Secondly, exporters can compare different factoring service providers based on the total funded transactions to date. Thirdly, choosing a recourse-based factoring service will undoubtedly be a lot cheaper compared to a non-recourse service. However, the inherent risks of a recourse-based factoring solution may outweigh the costs, as the risks fall back upon the seller in case of a default.
Offer flexible payment terms to your foreign buyers
Get a line of export credit over and above your bank’s credit facility
Maintain a positive cash flow
Easier and faster access to working capital
Never wait for buyer payments
Reduce your dependence on bank loans
Steps to Apply to Drip Capital's Factoring Platform
Submit invoice digitally on Drip's Portal
Get 80% invoice value in advance
Buyer pays 100% to Drip Capital
We pay you remaining 20% less our charges
Why Choose Drip Capital?
We are a fintech company focused on solving the working capital problem for emerging market SME exporters by leveraging data and technology. We are re-building core parts of international trade finance infrastructure to level the playing field for small businesses.
Collateral free working capital
Fund your exports growth using your foreign trade receivables.
Credit limit up to $3 Million
Get post-shipment export credit line up to $3 Million.
Competitive pricing
Cost of export financing can be as low as 0.7% per month basis credit evaluation.
Paperless, swift, transparent
Use Portal by Drip Capital for faster fulfilment and end-to-end service.
Costs of Drip Capital's Invoice Factoring Solutions
Over the course of more than half a decade, we've had the opportunity to perfect our offering and affordable factoring solutions for domestic and international traders in India.
These are the typical costs of factoring with Drip Capital:
- Interest Rates: We charge anywhere between 0.8% per month to 1.4% per month to our clients, the actual interest rates vary depending on the supplier's financials, the seller's track record of completing orders, and the buyer's track record of successful purchases.
- Processing Fees: Unlike other factoring firms, we take pride in charging some of the lowest processing fees in the industry, and on occasion, we may also waive them off.
That's it, there are no other hidden costs in availing our trade factoring services.
We've compiled this article to compare general factoring costs in the market.
Quick Facts About Drip Capital
$8 Billion+
Trade Financed
11000+
Buyers & Suppliers
100+
Countries
100,000
Cross-Border Transactions
Growth Stories
Learn about how we’ve 10x’d exporters.
Pari Agro Exports
Exporter of Basmati Rice from Punjab
4x increase in Turnover USD millions Drip’s factoring service has ensured that our liquidity doesn’t remain tied up in invoices for a long time. Since the start of our collaboration, we have been able to cater to more buyers, and our export turnover has increased 4x between FY17-18 and FY18-19.
Varun Sachdeva Promoter, Pari Agro Exports
Tatva Enterprise LLP
Exporter of Plastic products from Maharashtra
7x Increase in Turnover USD millions We started factoring our export invoices with Drip in FY17-18 and by 18-19 we were getting almost 25% of our invoices financed by them. With the boost in working capital and increased competitiveness in foreign markets because of better terms of sale, our turnover has shown a substantial increase.
Hiral Parikshit Pawar Promoter, Tatva Enterprise LLP
Al Sami Agro Products
Exporter of frozen foods from Andhra Pradesh
3x increase in Turnover USD millions As an exporter, you may have a great offering, but without easy access to short-term finance, you face challenges in scaling and have to let go of many opportunities. Drip Capital’s easy and efficient export finance solution has helped us ensure there is continuous cash flow in our business. Now we can convert possibilities which we otherwise would have passed on. The result has been a 220% jump in sales in FY19.
Abdul Salam Promoter, Al Sami Agro Products
Satya Impex
Exporter of Red chillies from Andhra Pradesh
50% wallet share USD millions When we started our business in 2017, traditional lending institutes could not keep up with the increasing orders from our buyers. With Drip capital fulfilling our working capital requirement, in FY 19 our business reported massive growth as compared to the previous year, over 50% of those export invoices were financed by Drip.
Thota Rama Krishna Promoter, Satya Impex
Frequently Asked Questions
How long do you take to process an application for invoice factoring?
Most invoice factoring applications that include all the required information are processed within seven working days.
How is invoice factoring different from a bank loan? Information regarding credit insurance and other details can be referenced within respective guides.
Looking for more questions? View All