Supply chain financing (SCF) has come to the rescue of MSME pharmaceutical companies and hospitals during the COVID-19 pandemic. SCF is a tech-based financing process ensuring MSMEs are no longer remaining under-served and deprived of accessing credit.
Reforms like the GST have streamlined trade flows and are enabling MSMEs’ access to finance. Over 10% of new MSME lending in the past two quarters of COVID-19 was delivered through digital platforms.
While bank financing relies on documentation requirements, financial track record, security collateral requirement, GST and other forms of trade flow data, SCF allows faster assessment, less documentation and cheaper credit.
“We have enabled Rs. 3,000 crore of trade financing across pharma and healthcare sectors. These sectors underwent significant capacity stress during COVID-19. Hospitals, pharmacies, pathology labs, pharma and consumable manufacturers witnessed demand that was never planned for. The pressure on the supply chain was immense, with the need to optimize production, logistics and inventory management. Pharma and healthcare have been receptive to the supply chain finance model that it helps to manage working capital requirements. These facilities are credit lines for financing based on short-term open account trade backed by invoices,” said Ram Iyer, founder and CEO, Vayana Network.
This financing model can be offered to super-stockist/sub-stockist/pharmacy retailers for financing inventory, pickup points for procurement of inventory from pathology lab companies, medical device and consumable manufacturers can offer liquidity to their distributors. Drug manufacturers and API/intermediate manufacturers can avail receivable factoring to convert receivables from large institutional customers. Suppliers and long tail vendors of pharma companies can benefit from early payment options, he added.
As a leading platform for trade finance, we are working with 5 of the top 10 pharma companies in the country. This apart, assistance is given to a number of emerging pharma enterprises. Traditionally, pharma supply and distribution chains have been well capitalized. But there has been a growing interest in supply chain financing solutions, with the pandemic, Iyer told Pharmabiz.
Our trade financing offers a collateral free financing at lower interest rate compared to unsecured financing from other sources. With over Rs. 37,000 crore in financing across 25 industries, Vayana has extensively worked with hospitals, pharma manufacturers, medical device manufacturers to structure financing programmes for enabling liquidity on the supplier side or distribution side, he said.
Efforts to digitize all steps of the trade financing process with zero change management for seller and buyer has ensured a simple, easy and sustainable financing on tap for the healthcare supply chain. These solutions meet global data security and privacy standards. By digitisation of trade, e-invoicing will facilitate quicker payment settlements. We are enabling hundreds of corporates for an e-invoicing automation with zero downtime over the last 40 months. We are the preferred gateway to numerous corporates, ERPs and GST compliance, he said.