Glossary

The share of the invoice value paid to you up front, before charges. We advance 90%.

The rest is not lost - it is held back and released once your buyer pays.

See also retention.

The large, creditworthy company that owes the money. In this kind of financing the lender is really lending against the buyer’s ability to pay, not yours.

It is why a small supplier to a large buyer can get a better rate than the same supplier could get on an ordinary business loan.

The total cost of the money, including every fee, expressed as a yearly rate. It is the only number that lets you compare this against a bank overdraft or a term loan.

A "1.15% a month" headline is not 13.8% a year once fees are in and once you account for getting the money for 60 days rather than 365. We show the APR on every quote.

See also discount charge.

Legally transferring the right to collect a debt from you to the financier. After assignment your buyer owes the financier, not you.

This is what factoring does and what we do not do. We advance against your invoice; the debt stays yours and your buyer keeps paying you.

See also notice of assignment, recourse.

A central government registry of charges over assets. Factoring transactions are registered there so two lenders cannot unknowingly finance the same invoice.

We search it before every deal. It is one of the checks that runs automatically when you submit.

When your buyer pays less than the invoice face value - because of a credit note, a quality deduction, a rebate, or a short payment.

Dilution is the main reason a financier holds back a retention rather than advancing 100%. If your buyer deducts, the deduction comes out of the retention first.

See also retention.

The moment the money leaves the financier and lands in your bank account.

Under RBI rules it must go directly to your account. It cannot pass through us.

See also escrow.

The interest on the money you are advanced, charged for the number of days until your buyer pays. It is charged on the amount advanced, not on the full invoice.

Pay early and it is smaller. It is the largest single line in the cost of most deals.

See also tenor, apr (annual percentage rate).

The document generated when goods worth over ₹50,000 move between places. It records what moved, when, and to whom.

We check it against your invoice automatically. Matching it is strong evidence the goods were actually delivered, which is what a financier is really buying.

An account controlled by someone other than the two parties, used to hold money in transit.

RBI’s digital lending rules do not allow a platform like us to hold your money in a pass-through account. Collections go to an account the lender controls, and payouts come to you directly. We never touch the funds.

See also disbursement. How the settlement accounts are structured

Selling your invoices to a finance company, which then collects from your buyer. Your buyer is told.

See also invoice discounting, assignment. Factoring, explained

Borrowing against invoices you have already raised, while you keep collecting from your buyer yourself.

See also factoring. Invoice discounting, explained

The unique number the government e-invoicing portal issues when a business above the turnover threshold registers an invoice.

It proves the invoice is real and was declared to the tax system. We check it automatically.

A one-page statement, required by RBI, that sets out everything a loan will cost you - including the APR - in a standard format before you agree to it.

You get one before you accept any quote. If a lender will not give you a KFS, that tells you something.

See also apr (annual percentage rate).

Micro, Small and Medium Enterprise - the official size classification for Indian businesses, based on investment and turnover.

See also udyam registration.

A standing instruction that lets a bank collect an agreed amount from an account on an agreed date, without asking again each time.

It is how repayment is automated. It is also one of the things corporate buyers most often refuse, which is why we do not require one from your buyer.

The letter that tells your buyer the debt has been transferred and gives them the account to pay into instead.

Factoring requires one. Our financing does not - your buyer keeps paying you the way they always have.

See also assignment, recourse.

Sending one rupee to a bank account to confirm it exists and to read back the name on it.

Your financier or their bank may do this before paying you. BZi Growth does not - we are not in the payment path, so the account you are paid into is checked by whoever is paying.

RBI requires banks to lend a set share of their book to sectors including MSMEs. Lending to MSMEs counts towards that requirement.

It is why a bank may quote you a lower rate than an NBFC on the same invoice.

Whether the financier can come back to you if your buyer never pays. With recourse, they can. Without recourse, the loss is theirs.

This is the single most important term in the agreement and the one most often buried. Ours is with recourse, and we say so on every quote.

If your buyer never pays, told as a story

The part of the invoice not advanced to you up front - 10% - held back until your buyer pays.

It is released to you, less charges, once the money comes in. If your buyer short-pays, the shortfall comes out of this first.

See also advance rate, dilution.

A state tax on certain legal documents. Assigning a debt is one of them - in Maharashtra it is 0.1% of the amount assigned, capped at ₹1,00,000.

It does not arise on what we do, because nothing is assigned. It is a real cost of factoring, and worth asking about if somebody quotes you one.

See also assignment.

The number of days between getting the money and your buyer paying.

Cost scales almost entirely with this. A 30-day invoice costs about half what a 60-day one does.

See also discount charge.

Trade Receivables Discounting System - RBI-licensed exchanges where banks bid to finance MSME invoices. Companies above ₹250 crore turnover are required to be registered.

Whether you can use it depends on your buyer being registered, not on you. Rates there are set by auction and vary by buyer, tenor and the day. BZi Growth is not part of TReDS and earns nothing from it.

How to check whether you are eligible

The government registration that formally makes your business an MSME. It is free and done online.

Without it you cannot claim the 45-day payment protection, and most MSME-specific credit schemes are closed to you.

See also msme.