Medium, Small and Micro Enterprises (MSME) sector contributes almost29% towards India’s GDP through national and international trade and comprises of over 63 million MSME entities. The sector is also the largest employment generator after Agriculture, providing employment to over 110 million people. However, most Indian MSMEs face dire cash crunch, especially when they are growing and are faced with continuous and large order inflows.
There have been several initiatives from the Government and the Central bank to ensure easy access of formal credit facilities to MSMEs. However, density of the MSME population and their lack of awareness, coupled with risk averseness and reach limitation of most Banks, results in a persistent wide gap in the convenience of an MSME supplier getting cash flow assurance. At times, a large inflow of orders may result in a cash crunch due to delay
In such cases, our Cash Flow Management products and advisory can act as a saviour and provide small businesses with the required cash to run daily operations smoothly without worrying about payables and/or receivables.
If you are interested in knowing more about our Cash Flow Management Services, please read on!
Though Supply Chain Finance means Financing of all legs of a Supply Chain, in Financial terms, it refers to mostly Post Shipment Finance.
Supply chain financing (SCF) is a form of lending where MSME sellers can receive early payment against invoices raised by them to large buyers. As the financers of this trade lend funds based on both the buyer’s financial standing and the confirmation of supplies, suppliers receive SCF at a lower cost when compared to borrowing independently based on the overall balance sheets. SCF can be in the form of Invoice Discounting or Factoring, depending on the requirements of the trade, logistics and/or the sellers’ financial position or decision.
Packing Credit (PC) is a form of loan provided to Sellers against orders received by them from large buyers. However, since this type of credit needs evaluation of the Seller’s financial status and track record, it is provided to established firms for specific orders.
Export Finance is provided to exporters under various routes and also involves Insurance coverage from ECGC for part of the receivables. Financers extend both pre and post shipment credit to exporters depending on their track record and financial status. A variety of forex hedging services can be availed from various organizations to insulate against currency and/or interest rate risks.
Term or Project Loans are provided by various financers for capital expansion or new projects. The assessment for such loans requires detailed information about the project including cash flow and financial projections. Financers then assess the success possibility of the project, returns expected post completions and the security available against the risk. After a reasonable due diligence, such loans are extended.
We, at Aajivika……. Have a qualified and competent team to assist you in both discovering the best financing solution for your needs as well as facilitating access to the right financer as per those needs.
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