Purchase Invoice Discounting

Extend payment terms. Pay suppliers early.

Finance the invoices you owe your suppliers. Your supplier gets paid immediately — you get extended payment terms. Improve working capital without taking on new debt.

Get a Quote Talk to an Expert

Overview

What is Purchase Invoice Discounting?

Purchase Invoice Discounting (also known as Reverse Factoring or Supply Chain Finance) is a financing arrangement that sits on the payables side of your business. A lender pays your supplier on your behalf against the purchase invoice — and you repay the lender at a later, extended date.

Unlike traditional loans, Purchase Invoice Discounting is self-liquidating and directly tied to your trade payables. Your supplier benefits from early payment while you benefit from extended credit terms — creating a win-win across the supply chain.

Dhanvraksh connects buyers with a curated network of banks and NBFCs to facilitate Purchase Invoice Discounting at competitive rates, ensuring both buyer and supplier benefit from the arrangement.

Apply for Purchase Invoice Discounting

Process Flow

How Purchase Invoice Discounting works.

Purchase Goods / Services

You purchase goods or services from your supplier, who raises a purchase invoice payable within 30–180 days.

Submit Invoice to Dhanvraksh

Share the purchase invoice details with Dhanvraksh. We evaluate the invoice and connect it to our lender network.

Supplier Gets Paid Early

The lender pays your supplier the full invoice value (or a high percentage) immediately — often within 24–48 hours.

You Pay the Lender Later

You repay the lender on an extended due date — typically 30–180 days — improving your working capital cycle.

Transaction Closed

On repayment, the facility is closed. You can roll it forward for future invoices from the same or other suppliers.

Benefits

Why businesses use Purchase Invoice Discounting.

Extend Your Payment Terms

Convert short payment cycles (30 days) into extended credit periods (90–180 days), dramatically improving working capital.

Strengthen Supplier Relationships

Suppliers receive early payment, which builds loyalty and can earn you preferential pricing or priority on orders.

No New Debt on Balance Sheet

Purchase Invoice Discounting is a trade finance instrument — it typically does not appear as a traditional loan on your books.

Access Early Payment Discounts

Suppliers may offer 1–3% discounts for early payment. Dhanvraksh helps you capture these discounts while preserving cash.

Improve DPO Ratio

Extend your Days Payable Outstanding (DPO) metric, improving your cash conversion cycle and financial efficiency.

Scales with Your Business

Finance one supplier invoice or manage multiple suppliers simultaneously. The facility scales with your purchasing volume.

Product Details

Purchase Invoice Discounting — key parameters.

Parameter	Details
Best For	MSMEs, Manufacturers, Distributors, Large Corporates
Invoice Type	Purchase / Payable invoices (from your suppliers)
Advance Ratio	Up to 100% of invoice value
Tenor	30 to 180 days
Typical Rate	7% – 14% p.a. (depending on buyer credit profile)
Processing Time	Supplier paid within 24–48 hours of submission
Collateral	None — invoice-backed, no property pledge required
Customer Notification	Supplier is part of the arrangement (tri-party)

Suitability

Who benefits from Purchase Invoice Discounting?

Manufacturers

Purchase raw materials and components on extended credit while your supplier gets paid immediately. Keep your production lines running without tying up cash.

Distributors

Finance large purchase orders from principals and distributors. Extend payable timelines to match your receivable cycles.

MSMEs

Access early payment discounts from suppliers without using your own cash. Improve DPO while maintaining strong supplier relationships.

Large Corporates

Manage multi-supplier payment cycles efficiently. Offer supply chain finance to your key suppliers as a strategic benefit.

Eligibility & Documents

Simple requirements. Fast onboarding.

Eligibility Criteria

Registered business entity (Pvt. Ltd, LLP, Partnership, Proprietorship)
Valid GST registration
Minimum 2 years of business operations
Regular purchase activity with established suppliers
Creditworthy business profile

Documents Required

Business KYC (PAN, GST certificate)
Certificate of Incorporation / Partnership Deed
Last 12 months bank statements
Audited financials (last 2 years)
Purchase invoice copies
Supplier KYC and bank details

Apply Now

Start extending your payment terms today.

Dhanvraksh makes it easy to set up a Purchase Invoice Discounting facility. Our team will evaluate your supplier invoices and connect you with the best financing offer within one business day.

Supplier paid within 24–48 hours
Extend your payment terms by 30–150 days
No collateral required
Competitive rates from our lender network

FAQs

Frequently asked questions.

What is Purchase Invoice Discounting?

Purchase Invoice Discounting is a financing solution where a lender pays your supplier on your behalf against your purchase invoice. You repay the lender on an extended due date. It allows you to extend payment terms while your supplier benefits from early payment.

How is Purchase Invoice Discounting different from Sales Invoice Discounting?

Purchase Invoice Discounting works on your payables — the invoices you owe to your suppliers. Sales Invoice Discounting works on your receivables — the invoices your customers owe you. Both are forms of supply chain finance, but they work on opposite sides of your business transactions.

Does my supplier need to know about this arrangement?

Yes. Purchase Invoice Discounting is typically a tri-party arrangement — you, your supplier, and the lender. The supplier needs to confirm the invoice details and provide their bank account for direct payment.

What is the tenure of Purchase Invoice Discounting?

Tenors typically range from 30 to 180 days, depending on your industry, the supplier relationship, and the lender's appetite. We work to structure tenors that best match your purchase-to-sales cycle.

Is collateral required?

No. Purchase Invoice Discounting is an invoice-backed, self-liquidating facility. There is no requirement to pledge property, fixed deposits, or personal assets. The purchase invoice itself forms the basis of the financing.