MSMEs, are overly caught up and resource-starved

Source: Livemint

There was one moment when fate turned their way, a moment that they can look back upon and say, that was when it started. Capturing click moments.

“MSMEs, are overly caught up and resource-starved.” – R. N. Iyer, Founder – Vayana Network.

Supply chain finance (SCF) is financing of the credit terms associated with a trade. A buyer typically likes to pay later than expected and a supplier would want her monies in as early as possible.

SCF helps both of them meet their objectives. To get it working, however, a supplier and a buyer need to give evidence that one has sold and that the other has accepted the obligation to pay, i.e. a valid trade relationship exists between the two. In the B2B world, with every firm having its own invoicing system, invoice format and acceptance procedure, it is a nightmare to get this evidence in physical or electronic form. The current wisdom is to get all these documents uploaded in a portal in pre-approved formats. While this looks like a great idea, it is a huge inconvenience to any small business which has neither the bandwidth nor technical expertise to do this day in and day out.

I was grappling with this challenge over dinner with some friends and I used my credit card to pay the bill. At that moment it just struck me that I had actually taken a loan (albeit not paying any interest) and I had not even paid any thought to the whole process of giving the card, entering my pin etc. This “muscle memory” manner of taking a loan was really the voila moment for us and the basis of us enabling over $1.5 billion of supply chain financing on our network. MSMEs have the same bandwidth as retail customers on the actual process of trade financing. They are overly caught-up and resource starved in their “buy-make-sell-collect” cycle. Convenience to them means not just digital (online, mobile) but minimal engagement (a point missed by most tech-enabled companies). Vayana Network facilitate financing of the MSMEs’ trade by making access as simple as a credit card transaction and not another explicit task or overhead for the SME.