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Understanding Invoice Factoring: A Complete Guide for Indian Businesses

By Akshit Agrawal · February 16, 2026 · 1 min read · 1 views

What is Invoice Factoring?

Invoice factoring is one of the oldest forms of business financing, yet many Indian businesses are still unfamiliar with it. At its core, factoring allows businesses to convert their outstanding invoices into immediate cash.

How Does It Work?

When your business delivers goods or services and issues an invoice with payment terms (say Net 60 or Net 90), you typically have to wait for the buyer to pay. With factoring, you sell this invoice to an investor at a small discount and receive cash immediately.

Benefits for Indian Businesses

For Indian SMEs, factoring offers several advantages: improved cash flow, no debt on balance sheet, no collateral required, and the ability to take on larger orders without cash constraints. With platforms like FINOCRED, the process is now fully digital and transparent.

The FINOCRED Advantage

FINOCRED brings technology to traditional factoring. Our platform connects businesses directly with investors through a transparent bidding system, ensuring competitive rates and fast disbursements.