Businesses are categorized depending on the size and scale of their operations. SMEs, or, Small and Medium Enterprises are one of the biggest and most popular types of businesses. These are businesses which are doing well, but may not necessarily be operating at a mass scale. Each kind of business has their own specific needs and faces different problems. One problem that SMEs tend to face from time to time, especially during their early run is that of Cash Flow.

Sometimes SMEs run on a credit basis where goods and services are delivered first and the money comes to them after the credit period expires for the debtor. However, between the period of delivering that service or goods, there may be times when a company needs urgent cash. Be it for paying off their creditors or be it for tasks such as repairs or basically, any sort of emergency that a small business may face. With an urgent need of cash – there are two options that most businesses prefer – Bank Overdrafts and Invoice Financing.

Bank Overdraft is a facility that banks offer to their customers where they can take borrow cash from the bank – which isn’t actually a loan. While a loan involves a detailed process and involves a large amount of money, bank overdrafts are provided instantly and on the basis of the kind of capital that has been stored in the account over the years. Moreover, credit ratings are also considered. The amount then has to be paid off. This is basically a debt that the business is taking from the bank which needs to be re-paid with interest.

Invoice Financing is a different process. Here, SMEs which need quick cash sell off their business invoices to financers. Basically, these invoices carry the receipt of money which is yet to be received from debtors. If a business which owes $5000 from a debtor is in an urgent need of cash for some purpose, they can sell off that invoice at $4800 to a financer who would provide them with $4800 instantly. Upon expiration of the credit period of the invoice, the financer will collect $5000 from the business, making a profit of $200.

In case of overdrafts, SMEs borrow money from the bank and have to return it later – making it a liability on the SME. In case of Invoice Financing, however, businesses basically sell off invoices of accrued income, i.e., money which is to be received by them, which technically is an asset! Hence, Invoice Financing can be better than a bank overdraft.

Invox Finance is a company which is starting off a blockchain-based system for invoice financing. Using this platform, individual investors can buy off invoices, or fragments of an invoice (or fragments of multiple invoices). Invox Finance is currently raising funds for this platform via their token sale. Those who invest into the tokens would get Invox Tokens using which they can trade on the Invox platform and buy off invoices. For more details on the platform, visit:

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