In today’s investment landscape, wealth creation opportunities have grown beyond traditional stocks and bonds, and investors are gearing up to make the most of these opportunities.
If you’re also one of those investors looking to diversify your portfolio with higher-yield, shorter-term investments, invoice receivable financing could be a game-changer for you.
altWings by altGraaf is one such product that is specifically designed to offer you a fresh way to earn attractive, risk-adjusted returns while helping businesses access the working capital they need.
What is altWings?
altWings by altGraaf is an invoice discounting product, carefully curated to suit people with a high-risk appetite and the willingness to invest in options carrying higher risk, to gain higher potential rewards.
altWings helps you invest in varied industries and sectors from retail and FMCG to pharmaceuticals and technology, in both established and upcoming entities. The unsecured nature of this investment lets investors manage their investments in a hassle-free manner while earning an IRR as high as 14%.
How Does altWings Work?
Managing cash flow is a common challenge for businesses, especially when it involves a wait time of 30 days or more for invoice payments. This is where invoice financing and products such as altWings come in. They allow businesses to get paid for their invoices upfront by offering them to investors like you via altGraaf. In return, investors can earn attractive short-term returns while helping businesses manage their cash flow seamlessly.
Here is a detailed description of the investment process:
- Seller Requests Invoice Financing: The seller sells goods and services to the buyer and raises invoices against them. Then the seller approaches entities such as altGraaf to finance its buyers’ unpaid invoices with a future repayment date
- Due Diligence and Approval: altGraaf conducts a detailed credit screening process. This includes reviewing the seller’s financial statements, cash flows, and transaction history to assess the risk involved. If the seller meets altGraaf’s criteria, they are approved for financing
- Listing the Invoice on the Platform: Once approved, altGraaf lists the seller’s invoice on its platform, offering individual investors the opportunity to participate
- Investor Participation: Investors choose to finance the listed invoices by providing the required funds to the seller, allowing the business to access immediate cash flow
- Repayment through Escrow: On the repayment date, the buyer pays the seller their invoice amount. The seller then transfers the funds to investors through a secure escrow collection account, ensuring the investors receive their returns
- Investor Returns: Investors receive their returns, including the principal and interest, based on the terms agreed upon at the time of the investment
Let’s break down how altWings works further with a simple example:
Say that Chingo Chips (seller), a company that recently sold goods to Bharath Retail (buyer), is expecting payment in 90 days. Instead of waiting, Chingo Chips reaches out to altGraaf for invoice financing. After altGraaf’s internal due diligence, once it shows the fund to be a good fit, we list this opportunity on the platform, offering you a chance to invest with a yield of 12.5 to 14%.
You can invest in Chingo Chips’ invoice receivables, which helps the company access the cash they need. And after 90 days, Bharath Retail pays Chingo Chips, through an escrow account, transfering you your fund along with returns.
One thing to remember here is that under altWings, the buyer pays the seller first, and then the seller transfers the funds to altGraaf, instead of the buyer paying an escrow account controlled by altGraaf.
Key Risk Mitigants in altWings
While altWings provides an exciting opportunity for higher yields, we know risk management is crucial. That is the reason there are several safeguard mechanisms built into the process:
- Post Dated Cheques (PDC) or undated cheques are required for each invoice
- We only work with companies that have a solid credit history and a proven track record of handling invoices and payments
- Every invoice is thoroughly validated to ensure authenticity and accuracy
However, there are always some risks involved, and understanding those risks is essential for making informed decisions.
Understanding What You are Signing Up For
- Credit Risk: This is the chance that the buyer (e.g., Bharath Retail) or the seller (e.g., Chingo Chips) may fail to repay the invoice on time. Since there is no bank guarantee or trade credit insurance, if the buyer defaults or delays payment, investors could face potential losses
- Commingling Risk: Unlike some other financing products, altWings involves payments first going from the buyer to the seller before reaching investors. If either the buyer or seller delays or defaults, there is a risk of funds being mismanaged or held back, affecting investor returns
- Liquidity Risk: Since altWings has a fixed repayment tenure (e.g., 90 days), investors must wait for the end of this period to receive their returns. This could be a concern if investors need to exit or access funds early.
- Operational Risk: Errors or delays in the due diligence process, or issues in the transaction flow between altGraaf, sellers, buyers, and escrow accounts, could impact how smoothly the investment process runs, potentially affecting returns.
- Lack of Control Over Escrow Accounts: altGraaf does not manage the escrow accounts directly, meaning any issues related to escrow management could pose a risk. Delays or mismanagement of payments through these accounts could affect timely investor payouts.
- Concentration Risk: If investors focus a significant portion of their capital on a small number of invoices or companies, any defaults or delays in those specific investments could proportionally impact their portfolio returns. Diversification can help mitigate this risk.
Conclusion: Is altWings the Right Choice for Your Investment Portfolio?
Investing in altWings offers a unique opportunity to diversify your portfolio with short-term, high-yield returns through invoice receivable financing. While there are risks involved—such as credit and operational risks—altGraaf’s thorough due diligence and risk mitigants significantly reduce potential downsides.
For those of you who are comfortable with a higher risk appetite and are looking for an alternative to traditional fixed-income options, altWings can provide an attractive risk-reward ratio. It’s particularly suited to investors who want to diversify their portfolios, add a new income stream, or explore alternative investments with the potential for strong returns over short periods.
However, altWings isn’t limited to experienced investors; it’s also an accessible option for individuals who want to dip their toes into alternative finance products without locking in their money for too long.
Frequently Asked Questions About altWings
What is the minimum investment amount for altWings?
The minimum investment amount for altWings is INR 50,000. altGraaf provides different investment options with different requirements. Please check the website for more information.
What is the investment tenure for altWings?
The average investment tenure for altWings is between 30 and 90 days. Investors can choose their investment tenure based on their requirements and needs.
Is My investment in altWings secure?
altWings is one of the higher-risk investment options, with a high yield of 12-14.5%. Investments under this product are not secured or backed by bank guarantee. You can check out the other secured investment options on the platform.
