Channel Financing: Transforming Accounts Receivable Management in India
Global PayEX
Optimizing and Automating Accounts Receivable and Accounts Payable Processes
In India, channel financing is becoming an essential component of accounts receivable (A/R) management, offering a vital solution for businesses seeking to optimize their cash flow. This financial mechanism provides immediate liquidity by enabling companies to obtain funds against their outstanding invoices, thereby bridging the gap between invoice issuance and payment collection.?
Understanding Channel Financing
Channel financing is a process where businesses receive funds based on their receivables, with financial institutions such as banks and non-banking financial companies (NBFCs) facilitating this process. This allows companies to manage their cash flow more effectively, avoiding the cash crunch that often accompanies extended payment terms.?
Key Steps to Secure Channel Financing Success?
Prequalification of Invoices?
The first crucial step in channel financing is invoice prequalification. For an invoice to be eligible, it must meet specific criteria, including authenticity and compliance with the agreed terms between the seller and the buyer. Advanced technologies, including automated systems and blockchain, are increasingly used to verify invoices and ensure they are genuine. This process mitigates the risk of fraud and ensures that only valid invoices are financed.?