‘Set Your Own Terms’ Vendor Financing Is Revolutionizing Invoice Discounting Market, Seeing Explosive Growth – Punekar News
India, March 15, 2022: CashFlo, India’s leading digital supply chain finance platform, has reported a massive increase in demand for its “Set your own terms” supplier financing solution from its network of 3,00,000+ SME. CashFlo’s “Set Your Own Terms” feature allows SMEs to better control their working capital at their preferred rates. The platform has seen explosive growth and crossed Rs. 10,000 Crores in annualized billing streams on this unique proposition.
Founded in 2018 by Ankur Bhageria and Dushyant Agarwal, CashFlo currently operates a strong and exponentially growing network of 3,00,000+ MSMEs and 60+ large Indian companies. CashFlo gives sellers and dealers access to affordable, short-term capital and improves buyer outcomes by democratizing access to working capital across their entire seller base.
Traditionally, SMEs do not have the ability to access short-term cash as needed. Obtaining loans comes with the added stress of putting collateral in place as well as the delay caused by paperwork. Invoice discounting, in theory, is much simpler, as it requires neither.
Although supplier financing offers SMEs a plethora of benefits in optimizing business operations, it can still lock suppliers into costly terms. Dushyant Agarwal, co-founder of CashFlo explained“Often, suppliers are required to enroll in invoice discounting or “total sales” payment discounting programs – Suppliers must immediately discount all invoices; whether sellers need capital or not. Pricing is also determined by the buyer, and the entire program is standardized “one size fits all” for all vendors. This is costly for sellers, often 3 times more constantly, because they cannot match their discount income to their working capital requirement. What this leads to is seller dissatisfaction. They will disengage; or stay subscribed and raise prices with the buyer over time, to cover the cost of the discount, creating a lose-lose proposition for seller and buyer.
To overcome these challenges, vendors considered three types of flexibility. First, the ability to discount amount of the value of the invoice according to their needs, much like an OD or CC line. Second, ability to discount at any time during the credit period – not just at the beginning. Finally, the possibility of choosing oneself rate for invoice discounting. However, allowing only one or even two of the above elements would still entail significant costs for SMEs and would be insufficient to achieve full flexibility. Offering flexibility on rate and schedule, for example, would still force suppliers to discount 100% of their receivables, and costs would increase.
Elaborating on how SMEs can achieve the much-desired flexibility in doing business, Ankur Bhageria, Founder and CEO, CashFlo says, Unlike traditional factoring or invoice discounting, “The Set-Your-Own-Terms feature combines the three features most sought after by MSMEs. CashFlo allows vendors to choose their own discount rate, exact amount to remit, and duration (duration) of the rebate in a never-before-seen model. Based on the demand and supply of capital on the platform and several hundred vendor-specific data points, the CashFlo platform dynamically generates the most attractive offers for vendors in real time. . Sellers can accept or modify this offer and get paid within 24 hours. This is a huge win for MSME providers because One-Click-On-Demand not only unlocks working capital based on their needs, but also at a cost that works for them. Ultimately, they have access to one-click, on-demand working capital with no paperwork or collateral, instant approval and payment within 24 hours – a first for the Indian market. In addition, it solves a fundamental problem of reducing collection overheads and the risk of late payments.
He added : “At CashFlo, the “Set-Your-Own-Terms” service has been rolled out and improved and the results are amazing. In no time we’ve been through Rs. 10,000 Cr annualized invoicing flow on the platformwith a network of 3 lakh+ MSMEs in almost 60 of the major corporate supply chains in Indiaincluding Thermax, Lupin, ITC, CG Power, etc. We plan to grow our invoice streams by more than 800% in the next fiscal year to over $10 billion per year”
CashFlo’s “Set your own terms” eliminates these problems by giving sellers the freedom to discount invoices on their terms. The platform gives SMBs the freedom to choose their own supplier financing offer, with the triple benefit of choosing their own rate, which invoices to discount and when to discount. Additionally, “Set your own terms” also benefits businesses with higher SME participation and therefore more liquidity is available throughout the supply chain. The supply chain is strengthened and the risk of supply chain disruption to the business is reduced. Businesses also benefit from lower procurement costs and longer credit periods.
In December 2021, CashFlo enhanced its flagship Dynamic Vendor Funding Platform by providing Staged Funding, Deep Funding, and a Corporate and Multi-Donor Treasury Platform. By integrating these first India-centric features, CashFlo helped increase customer ROI by 5x. As 2022 approaches, the company continues to be the preferred supply chain finance platform for large corporations in India.
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