Vayana for MSMEs

Supply chain finance: brownie points for businesses during the festive season

WhatsApp forwards and corporate hampers are here to remind us that festival season is upon us. With the season bringing a boom in demand, it gives every business a chance to grow their toplines. However, rising to the opportunity is a challenge for many.

With the festival season being short lived, a business must rapidly grow in volume. This volume is only achieved to the extent that the business can spend, as racking up inventory and bringing out new products incur higher costs. A supply chain financing program helps overcome such limitations. It offers a comfortable cushion of working capital to cope with seasonal fluctuations. Moreover, with the effect persisting across the supply chain, it mitigates the risk of retailer and distributor’s disruptions carrying over to the corporate. Because when a distributor and retailer are unable to scale purchases, the corporate’s products find it harder to reach retailer shelves. In this way, by smoothening the cashflows of associated supply chain partners, the corporate is made less vulnerable to short term changes.

Take the example of two competing businesses. The first is releasing a new chocolate box, and second an assortment of brownies. Both are limited editions for the festival. Here is their journey through the supply chain, one with the support of financing and the other without.

Both corporates rush to manufacture the items, to make the most of the heightened demand. The chocolate distributor can only purchase a small amount from their corporate as their regular inventory covers most of their budget. But if their retailers pay back in time, a few more chocolate boxes can be purchased. However, the brownie distributor, enabled by Vayana’s V-TAP distributor financing program, expands its spending capacity without depending on repayments. This timeliness is crucial with festive edition products having a strict expiration date. And from the corporate’s perspective, receiving immediate payments allows for more funds to go into brownie manufacturing. Happy with this, the corporate even offers the distributor a discount. Which lucky for the distributor, offsets any cost of financing, further easing business expansion. The brownie’s greater competitive advantage spreads across the country as the flexible financing works with distributors of all sizes and regions.

Now, the chocolates and brownies move to the next stage, changing hands from the distributor to retailer. With brownie distributors purchasing more, there is already a greater brownie presence amongst the retailers. However, like distributors, even retailers face a tricky purchasing situation, if not worse. Because while a distributor deals with a handful of corporates, a retailer purchases from exponentially more distributors, including soap and yoghurt ones. And with each distributor wanting to sell more, the purchasing pressures mount larger on the retailer. Hence for the brownie retailer, financing solves for more than one issue. The simplest being pricing advantages. The distributor offers the brownie retailer discount, with them purchasing more and paying immediately. Hence, empowered through financing, the brownie retailer’s long-term objectives of growth also get closer. As for the logistical chaos of festive retail, Vayana’s Retailer Financing platform brings further respite. Unlike chocolate retailers handling multiple payment terms and due dates, a brownie retailer simply scans a QR at the time of delivery. And with it being hard to predict festive sales to the brownies, this easily accessed liquidity also helps to quickly refill shelves.

Thus, with Vayana, not only is a cashflow financing program available in the market, but also implemented to meet the need of the hour. Ultimately gaining the brownie corporate greater visibility, competitiveness, and additions in customer carts. Hence, a financially lubricated supply chain enables all businesses to do more during this much anticipated celebratory time.

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