Clear expands into corporate financial services and launches invoice discounting

Clear (formerly ClearTax), a SaaS fintech company, today announced the launch of a bill discounting product for businesses, marking its foray into SME credit and B2B payments.

The Invoice Discounting product will be available to Clear’s more than 3,000 existing corporate customers to provide working capital solutions to their suppliers and help them grow their businesses, it said in a statement.

Supplier payment issues

MSMEs are the backbone of the Indian economy and having cash to grow is essential for their survival. However, these suppliers to Indian companies are estimated to need credit on invoices worth more than $200 billion (Rs 15 lakh crores) per year, and this need remains largely unmet.

A study by Clear of over 800 companies showed that supplier payments continue to be delayed by 60-120 days, even after the 2006 MSME Act which mandates MSME payments within 45 days. Invoice processing itself can take 5-20 days before payment can be made, compounding cash flow issues for suppliers. Many of these providers are then forced to take credit from unorganized sources at unaffordable rates because traditional credit models rely on cumbersome application processes and heavy collateral.

This discrepancy can be resolved with a technology invoice discount, which is a form of credit where suppliers are paid early at a slightly reduced value. This form of credit is still nascent in India (0.2% of GDP) compared to other developing economies such as China (11% of GDP). The lack of a common platform for a company, its suppliers, and its financiers to transparently process credit invoices is a barrier to the success of a large-scale invoice discounting program. Clear’s presence in GST and e-invoicing is best suited to address this bottleneck.

Technology solutions for SME credit

“We have deep experience building fintech SaaS for enterprises, which has led us to solve the burning need for technology solutions for SME credit and B2B payments in the ecosystem. State-of-the-art supply chain finance products, starting with invoice discounting, will provide an exceptional experience for businesses and their suppliers. said Archit Gupta, Founder and CEO of Clear.

Clear’s Invoice Discounting product was designed to provide instant working capital and liquidity to suppliers, and is expected to process $3 billion by the end of FY24. The intelligent AI-powered platform/ ML will connect to ERPs and allow selection of discount rates acceptable to both customers and their suppliers. Companies can choose from a range of financing options to finance their prepayments: they can use their own excess cash, or opt for a line of credit through banks, or go through TReDs markets from Clear’s platform, a he said in a statement.

“We are working in partnership with banks and NBFCs to operationalize supply chain credit at scale by enabling fast and cost-effective credit based on actual business performance and not just ownership of assets,” Gupta added.

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Posted: Monday, February 28, 2022, 11:29 a.m. IST

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