Invoice Discounting Compare

Additional Useful Information

• When an investor purchases an invoice / bill discount as a loan, the issuing company is bound by a legal contract wherein they are obligated to make interest payments as per the coupon rate to the investor.

• When an investor purchases an invoice / bill discount, the issuing company is bound by a legal contract wherein they are obligated to make sell the bill/invoice at a discounted price to the investor.

• The prices of Invoice Discounting keep changing with a changing economic environment.

Returns *

• Invoice Discounting do not guarantee any returns. however, the probability of negative returns is low.

• The primary component of returns for the investor is the difference between the discounted price paid and the face value of the invoice.

• Typically, Invoice Discounting can generate returns ranging from 10% to 15% per year depending on the duration for which they are held and their credit ratings.

Risk Level

• Invoice Discounting are considered medium risk investments.

• Invoice Discounting have a credit risk associated with them. This means that if the company to whom they are issuing these invoice default in their commitments, the investor can make losses on the investment.

• Invoice Discounting becomes riskier during times of economic downturn. This is because there's a higher risk that the company that have been issued the invoices won't be able to pay the interest during tough times.

Liquidity

• Invoice discounting generally offers high liquidity compared to other investment options due to its short-term nature.

Interesting Facts

• The highest quality invoices on credit rating scales are commonly rated as "Triple A (AAA)” invoices. Bonds up to a credit rating of “double B(BB)” are considered safe investments.

• The lowest quality bonds are rated as " (BB and below)" invoices. These invoices are high risk investment.

Tax Implications

• When investors sell their Invoice Discounting, the difference between the Sale Amount and Purchase Amount is typically called “Capital Gain” or “Capital Loss” (if sale amount is lesser than the purchase amount).

• In case of Capital Gain, this amount is to be added to the taxable income of the investor and taxes are required to be paid based on the applicable tax slab.

• There is no tax in case of “Capital Loss”.

Where To Invest

• https://www.altgraaf.com/products/invoice-discounting

• https://www.orowealth.com/invoice-discounting/