Use Case
Payable Financing in Automobile Manufacturing
Invoice Discounting solutions to improve cash flow for buyers and sellers.
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Unlock capital trapped in invoices and improve liquidity.
Payable Financing enables corporates & vendors to receive short-term
funding against their account payables.
funding against their account payables.
Background
The Anchor Company stands as a prominent automobile manufacturer in India, boasting an extensive product line encompassing cars, SUVs, buses, trucks, pickups, and defence vehicles. With a substantial and diverse vendor network comprising over 1500 suppliers spanning various locations and sectors, these suppliers play a crucial role in providing essential components, parts, and services necessary for the company's vehicle production and delivery.
However, a significant challenge faced by the anchor company's vendors revolved around their limited access to affordable and timely financing solutions. Many of these vendors, primarily small and medium-sized enterprises (SMEs), encountered difficulties in securing loans from banks or other financial institutions due to their constrained creditworthiness and lack of substantial collateral. Consequently, this limitation hindered their capacity to invest in their operations, fulfil their financial obligations, and foster business needs.
However, a significant challenge faced by the anchor company's vendors revolved around their limited access to affordable and timely financing solutions. Many of these vendors, primarily small and medium-sized enterprises (SMEs), encountered difficulties in securing loans from banks or other financial institutions due to their constrained creditworthiness and lack of substantial collateral. Consequently, this limitation hindered their capacity to invest in their operations, fulfil their financial obligations, and foster business needs.
Challenge
Small vendors encountered hurdles joining conventional bank discounting programs, primarily due to documentation complexities. Micro, small, and medium-sized enterprises (MSMEs) had restricted access to alternative financing avenues like NBFCs and fintech platforms due to high interest rates and stringent collateral demands.
MSMEs grappled with liquidity issues, had extended payment cycles from the Anchor Company following the delivery of their goods or services
MSMEs grappled with liquidity issues, had extended payment cycles from the Anchor Company following the delivery of their goods or services
Approach
In addressing the challenges faced by MSMEs, the Anchor company leveraged Cashinvoice's PayEarly solution. Every aspect, from processes to vendor communication, tailored to the anchor company's needs. Treasury Capital was available on-demand to registered MSME sellers, with no-cost registration and minimal documentation. Proprietary analytics identified critical vendors, streamlining liquidity support.
Cashinvoice extracted accepted invoices from the anchor company, offering vendors email and SMS notifications for early payment access, ensuring swift fund transfers on the next business day.
Cashinvoice extracted accepted invoices from the anchor company, offering vendors email and SMS notifications for early payment access, ensuring swift fund transfers on the next business day.
Result
- The Anchor company earned favourable returns on treasury capital compared to other risk-free instruments.
- Improved long-term trust and relationships with suppliers through hassle-free discounting.
- Reduced financing costs by 3-5% compared to standard unsecured borrowing rates.
- Improved access to finance for suppliers through an easy-to-use web and mobile app interface with minimal documentation.
- Streamlined digital processes by automating ad hoc supplier early payment requests, reducing manual work.
