As India’s leading invoice discounting platform helping businesses through our working capital solution, we are often asked how KredX ensures the authenticity of invoices listed on the platform and how we weed out the defaulters from genuine vendors like yourselves. Here we break down and explain the process we follow to ensure this.
Being a cash flow solutions provider, KredX requests our customers to provide a set of documents at three different stages: Pre-Sanction, Sanction and Post-Sanction.
Once a business looking for our invoice discounting service approaches KredX, we initiate the process to evaluate their profile. At this stage, we request for:
- KYC of all directors of the company, as per the RBI mandate. This not only acts as an identification proof, but it also helps KredX evaluate the intent of the people behind the business.
- CIBIL record of all directors to give us an indication of any frauds or defaults in the past along with CIBIL Pull Request.
- Proof of address and PAN Card of the company.
- Company bank statement of the past year to ascertain the business’s cash flow, timely payments from the corporate company supplies to, loans (if any), etc.
- Profit and Loss, Balance sheet and Auditors report of the last 3 years. In case the company is not older than 3 years, then KredX requests for audited financials for at least 1 year.
- Sales data for the last 1 year to help us decide the sanctioned limit after a quick tally with the bank statement.
- If the company is a Partnership, a Partnership Deed is to be submitted but in case of a Private Limited, a Certificate of Incorporation is requested. In case the company is a Proprietorship, a Sole Proprietorship Declaration is required.
- Loan Declaration along with Sanction Letters for all the declared loans with Terms & Conditions, in case the business has previously availed any form of financial assistance like OD, CC or secured and unsecured loans. This helps us ensure that the business does not have any prior defaults and has been making timely payments.
- If the business is an MSME, an MSME Declaration too is required since as per the law, an MSME must be paid within 45 days of invoice generation.
In case the business has not availed any loan, they will be asked to provide a No Loan Declaration.
Once these documents have been evaluated and verified, a Sanction Letter is sent to the vendor to be accepted and signed. This letter contains details pertaining to the sanctioned limit, tenure, etc. and has to be signed and returned within a stipulated period, after which the details mentioned in the letter becomes void.
Once the vendor has signed the Sanction Letter sent by KredX, we require the following documents to be able to begin listing the invoices on the platform.
- Board Resolution signed by the at least two directors of the company in the case of a Private Limited Company and all directors serving on the board in the case of Proprietorships, Partnerships and LLPs. This helps us confirm the authorised signatory(s) of the company and helps avert any potential fraudulent activities.
- If the company in question is a Private Limited, then a Memorandum of Association (MOA) and an Article of Association (AOA) are required to be submitted.
- The vendor is requested to hand over five post-dated cheques to KredX as security cheques amounting to the total limit sanctioned in case of a default in the future.
- A tri-party undertaking involving KredX, the vendor and the corporate the vendor supplies to is created and signed.
Since ours is a technology platform connecting investors with high-growth businesses looking for working capital through invoice discounting, KredX follows a stringent, multi-pronged evaluation process to vet and verify the authenticity and intent of businesses. Not only does this protect our customers, but it also helps build a strong culture of perfectionism within the company and among our business partners.
As always, should our valuable patrons have any queries with our process, they can always reach out to us at firstname.lastname@example.org. The KredX team is always around to answer our customer’s queries and assist them in any way that we can.