MSMEs reap the maximum benefits through Supply Chain Financing. It makes them credit ready and helps them take care of working capital needs. 

How Does Supply Chain Finance Work? 

The seller sends the buyer an invoice for the products delivered. Payment is normally due in 30 days on these invoices. When the seller, on the other hand, is in desperate need of cash, he sells the invoice to the Supply Chain Financer at a discount. When the invoice is due, the financer receives the whole amount from the customer. The financer stands to benefit from the seller's discounted pricing.

Who are the main stakeholders in a supply chain financing? 

  • The Supplier/Seller/Vendor
  • The Buyer
  • Bank/Finance Institution who is the Supply Chain Financer

What is the role of GST in MSMEs getting Supply Chain Financing?

GST data is a useful tool for monitoring a debtor's operation in real time, which can give a clear estimate of upcoming default.

What is the role of e-invoicing in Supply Chain Financing? 

Financiers will be able to detect and fund real trade transactions with the help of e-Invoice, which will add an extra degree of confidence and authenticity.

What is the role of NBFC(AA) in Supply Chain Financing?

NBFC(AA) or Account Aggregators, which have apparently gone online, will provide lenders with a unified platform, authorised access, of financial data from all participating firms, adding another degree of security.

How can MSMEs get funding through Supply Chain Finance services available in India?

  • Letter of Credit
  • Export and Import bills for collections
  • Export Letter of credit advising
  • Import and Invoice financing
  • LC checking, negotiation, confirmation and safekeeping
  • Performance bonds
  • Pre-shipment export finance
  • Shipping guarantees

Late payments from buyers and debtors are a continual problem for businesses. This reduces incoming cash flow for a period of time, which can be damaging to the business's development. Where other sources of short-term funding are unavailable, Supply Chain Finance becomes a necessity.