Using e-discounting for automatic pre-payment of accounts receivable

EDITEL and Intermarket Bank allow suppliers to turn outstanding invoices into cash at the click of a mouse

In times like these many companies focus on improving liquidity, creditworthiness, and their capital base. Thanks to a collaboration between Intermarket Bank, a subsidiary of Erste Group, and Austria’s leading EDI provider EDITEL, any company can now rely on Electronic Data Interchange (EDI) to turn its outstanding invoices into cash immediately and easily.

Using e-discounting for automatic pre-payment of accounts receivable

Nearly all companies in Austria that rely on Electronic Data Interchange (EDI) are connected to eXite, the data hub by EDITEL. Via eXite, companies exchange business documents including orders, despatch advices, and invoices automatically and in real time. With the innovative supply chain finance service by EDITEL and Intermarket Bank called “e-discounting,” accounts receivable can now be paid in advance automatically. “Our collaboration with Intermarket Bank is the perfect combination of two worlds. With e-discounting, suppliers send their invoices to retailers via the data hub like they usually do, but if needed, their account with any Erste Bank or Sparkasse will immediately be credited with up to 100 percent of the amount of the invoice,” said Gerd Marlovits, CEO of EDITEL, explaining the process. The technical processing is automatically done in the background via the interconnected systems of EDITEL and Intermarket.

Banks to assume the default risk for accounts receivable

For retailers, invoices look no different than before. They transfer the amount due to their suppliers’ accounts as they always do, which is usually towards the end of the payment term. Thanks to e-discounting, the money is transferred to Intermarket Bank automatically and without the need for any additional action, with the bank previously having made an advance payment to the suppliers. While the bank charges suppliers the usual interests and charges, e-discounting is still one of the most inexpensive forms of third-party financing available on the market. “Intermarket Bank even assumes the default risk in case the suppliers’ buyers struggle to pay the invoices. In addition, the immediate credit for outstanding invoices improves suppliers’ liquidity. At the end of the day, reducing outstanding invoices lowers the balance sheet total and improves a company’s capital base,” said Patrick Götz, a board member of Intermarket Bank.

Well-established Austrian companies are the main target audience

“Our e-discounting service mainly targets Austrian manufacturing companies that deliver their merchandise to retailers or wholesalers in Austria,” explained Mr. Marlovits. His company is also the market leader in Electronic Data Interchange for business documents (EDI) in central and eastern Europe. All that is needed for this advanced factoring option is a current account at Erste Bank or any Sparkasse as well as Electronic Data Interchange for invoices via the EDI service eXite. Thanks to the high degree of automation of Electronic Data Interchange for business documents, even small and very small invoices from one supplier can be bundled and turned into cash immediately.