Invoice discounting is a facility that enables suppliers to get cash settlement of their invoices from Banks upon confirmation of delivery of goods, whilst beneficiary is conferred with extended credit terms of up to 60 days. Invoice discounting allows a business to draw money against its sales invoices before the customer has actually paid. To do this, the business borrows a percentage of the value of its sales invoices from a finance institution, effectively using the unpaid sales invoices as collateral for the borrowing.
- It is based on an underlying transaction,
- It caters for large corporation with high credit profile,
- Financiers charge discount rates instead of interest rates,
- It is arranged for a fixed period of time in days i.e. 30 days, 60 days or 90 days depending on the nature of the goods and transaction.
What you need to apply
- Must clearly state the facility amount required e.g. Loan/Overdraft for USD10,000.00.
- Specify tenor/period of the facility.
- Purpose of the facility i.e. working capital requirements, order finance etc.
- Provide source of repayment.
- Company documents i.e. Certificate of Incorporation – CR14, CR6 or Constitution.
- Shareholding Structure and percentage shareholding.
- Related firms – provide family tree
- Lines of business and comment on your market share, major clients
- Competitor analysis.
- Directorship & Senior Management Profiles; including ages, academic & professional qualifications, occupation and work experience/history. Provide CVs for key management personnel.
- Latest and valid Tax Clearance certificate.
- Latest management accounts.
- Audited financial statements for the past two years.
- Cashflow Projection covering the tenor of the facility requested.
- Aged Creditors & Debtors Analysis, if any.
- Confirmed orders.
- Pro –forma Invoices (for intended expenses).
- Proposed security to cover the borrowing (preferably title deeds).
- Valuation of the proposed security – to be done by professional valuers.
- Current banking arrangements with other banks, including existing Credit Facilities, (Bank, Branch, Account Number, Branch/Relationship Manager, time with the Bank). Provide statements for the past six months.
- Your CBZ Account Number and Branch.
- Geological Reports showing the availability of resource.