Post the 2009 economic crisis, investors have been on the hunt for financial avenues with higher returns and lesser tenure. Enter Alternative Finance, the new-age sibling of traditional finance and banking. The alternative finance industry has seen a boom worldwide and India too is catching up on the trend.
In the past, our parents invested in traditional financial instruments like fixed deposits, real estate, gold, insurance policies and the like. Fast-forward to the present day. You have a great job, you earn well and you’re looking to invest some money. Sure, we all know about the conventional routes of investment. But what about alternative investments, the latest buzz word in the financial world? In a nutshell, alternative investments can be defined as any form of investment that falls outside of conventional banking and stock market investment. Here we introduce you to some of the popular forms of alternative investments.
Invoice Discounting platforms work like matchmaking services for Businesses with Invoices and Investors seeking alternative financing solutions with high returns. Such platforms host a range of Investors from Individual Investors to Banks and NBFCs. Considering the fact that Indian businesses face delay of 65 days to get payments from the day of Invoicing (*according to 2016 survey of Atradius on B2B Payments in APAC), there is a burning requirement among businesses to get easy access to cash. Invoice Discounting platforms serve this purpose as the tenure for this facility generally range from 30-90 days.
Even with all the positives about the product, it is not a zero-risk investment product. While the investors earn high returns on their investments, they should always remember the investment principle that higher the return, higher the risk. This article addresses the inherent risks involved in Invoice Financing.