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Bill Discounting Case Study

Let’s understand how bill discounting facility works!

John is an automobile parts manufacturer. He has a manufacturing plant in Pune and offices in many cities in India. Starting in 2010, John’s business has grown exponentially. His turnover is now Rs. 7.5 crores.

John is going to start manufacturing a new line of products in two months. While he is planning for the new manufacturing line, he realizes the issue of working capital which he may face. John will raise the invoice and his customer will pay it after a certain period of time at the decided due date, it takes 30 to 90 days to get the invoice paid by the client. John’s payment thus gets stuck and his working capital will be blocked till he gets his payment.

This new manufacturing line is for a big company. Thus the working capital cycle is long and John’s cash flow doesn’t allow for the desired credit period. John is thinking about taking funding from a financial institution. But he realizes he has no asset or property which he can keep as a mortgage. Also, paying interest on the entire amount of the loan doesn’t seem convenient to him. Thus, Considering the fact that he will be using the money until his customer repays him.

John is very worried. While searching for financial advisory firms online, he came across Terkar Capital. He approached Terkar Capital. They set up a meeting with him.

Business Highlights

Company Turnover Rs. 7.5 Crores
Amount Required Rs. 1.3 Crores as working capital
Mortgage Availability No Mortgage 
Company IndustryManufacturing Industry 

The first step

We discussed his situation and his business requirements. After careful analysis of the same. We suggested to him, that we can arrange the debt instrument. So, that works well for working capital and without a mortgage. We suggested Bill Discounting Facility. This was a perfect fit considering his requirements and his business. We explained to him the entire bill discounting process before starting the procedure.

What is next?

We then approached a financial institution for a bill discounting facility. John had good creditworthiness and the financial institution was convinced of the legitimacy of the bill. The respective financial institutions discounted the bill and the margin was decided as per the agreed terms. As per invoice financing, the financial institution has given the required exposure of Rs. 1.3 crores, which John can use as and when he raises an invoice to his customers. 

By MSME bill discounting John only had to pay interest on the amount of money he discounted. It is until that time period, he used the money. As soon as the respective financial institutions received the amount from the customer against the invoice, the cycle for charging interest stopped. So, John found purchase bill discounting very useful and it gave more flexibility to his business. 

How Terkar Capital assist?

Terkar Capital arrange the funding almost in CC format. Thus, the bill discounting facility limit was open for John. He could use the limit as and when an invoice was raised to the client. John could use the money immediately for working capital. Due to the bill discounting facility, he did not have to wait for 50 or 90 days until the customer paid him the invoice amount. The whole process of discounting bills of exchanges is carried out in 5 working days. Thus, Mr. John was super happy with our service and professional execution of the proposal.

Business Commencement Year 2010
Amount of FundingRs. 1.3 crores
Total Execution Time5 Working Days. 
Customer Service Experience 4.5/5

Bill Discounting Facility at Terkar Capital

We at Terkar Capital understand the importance of working capital for businesses. Our trained executives study each and every client’s situation. Thus, Understand their requirements. We then suggest the best financial solution for them.

Terkar Capital arranges a hassle-free bill discounting facility without a mortgage! We explain the entire process involved in taking the funding to the client, types of bill discounting, and so on so that the picture is clear at both ends. Terkar Capital has connections with many lending parties in the market. We are a highly reputed financial consulting and advisory firm. If you are looking for financial assistance? Terkar Capital is here for you!

Learn more about bill discounting from FAQs.

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