Set your Own Terms Vendor Financing Revolutionising Invoice Discounting market, Seeing Explosive Growth

CashFlo, India's leading digital supply chain finance platform reported a massive surge in demand for its “Set-Your-Own-Terms” vendor financing solution amongst its network of 3,00,000+ SMEs. CashFlo’s ‘’Set your own Terms’ facility empowers SMEs by allowing them to have greater control over their working capital at their preferred rates. The platform has seen explosive growth and has crossed Rs. 10,000 Crores in annualized invoice flows on this unique proposition.

Founded in 2018 by Ankur Bhageria and Dushyant Agarwal, CashFlo currently operates a strong, exponentially growing network of 3,00,000+ MSMEs and 60+ leading Indian corporates. CashFlo enables vendors and dealers to get access to affordable short-term capital and improves the bottom lines of buyers by democratizing the access to working capital across their entire vendor base.

Traditionally, SMEs do not get flexibility to access short-term liquidity as per their needs. Availing loans comes with the added stress of putting forth collateral along with the time delay caused by paperwork. Invoice discounting, in theory, is much simpler, as it does not require either.

Although vendor financing provides SMEs with a plethora of benefits in optimising business operations, it can still lock vendors into expensive terms. Dushyant Agarwal, Co-founder, CashFlo explained, “Often, vendors are made to enrol in “whole turnover” invoice discounting or cash discounting schemes – Vendors have to discount all invoices upfront, immediately; whether the vendors have a need for capital or not.  The rates are also determined by the buyer, and the entire program is standardized “1 size fits all” across all vendors. This is costly for the vendors, often 3x more constantly, as they cannot tailor their discounting inflows to their working capital requirement. What this leads to is disgruntlement for vendors. They will either opt-out; or stay opted-in and increase pricing with buyer over time, to cover for the cost of discounting, creating a lose-lose proposition for both vendor and buyer.

To overcome these pain points, vendors have been looking at three kinds of flexibility. Firstly, the ability to discount amount of invoice value as per their needs, much like an OD or CC line. Secondly, ability to discount any time during the credit period – not just at the beginning. Lastly, the ability to choose their own rate for discounting invoices. However, allowing for only one, or even two, of the above would still lead to large costs to SMEs and would be insufficient in achieving complete flexibility. Providing flexibility on just rate and timing, for example, would still force vendors to discount 100% of their receivables, and costs will go up.

Elaborating on how SMEs are able to achieve much-desired flexibility to do business, Ankur Bhageria, Founder and CEO, CashFlo said, Unlike traditional factoring or invoice discounting, “Set-Your-Own-Terms” facility combines all three most desired features by MSMEs. CashFlo allows vendors to choose their own rate of discounting, the exact amount to discount and the tenure (duration) for discounting in a never-before-seen model. Basis demand and supply of capital on the platform and several hundred vendor-specific data points, the CashFlo platform generates most attractive offers for vendors dynamically in real time. Vendors can accept or modify this offer and get paid within 24 hours. This is a huge win for MSME vendors, as One-Click-On-Demand not only unlocks working capital according to their needs but also at a cost that works for them. Ultimately, they get access to on-demand working capital at the click of a button, paperwork and collateral free, with instant approval and payment within 24 hours – a first for the India market. Moreover, this solves a fundamental pain point of reducing collection overheads and risk of payment delays.

He further said, “At CashFlo, the “Set-Your-Own-Terms” service has been rolled out and improved on and the results are incredible. In a short span of time, we have crossed Rs. 10,000 Cr in annualized invoice flows on the platform, with a network of 3 lakh+ MSMEs across nearly 60 of India’s leading corporate supply chains, including the likes of Thermax, Lupin, ITC, CG Power, etc. We have forecasted to grow our invoice flows by over 800% in the next financial year to $10+ billion p.a”

CashFlo’s “Set-Your-Own-Terms” facility eliminates these issues by giving vendors the freedom to discount bills on their terms. The platform gives SMEs the freedom to choose their own deal for vendor financing, with the triple benefit of choosing their own rate, which invoices to discount along with when to discount. Additionally, “Set-Your-Own-Terms” also benefits corporates with higher participation from SMEs, and as a result, more liquidity is available across the supply chain. The supply chain is strengthened and risk of supply chain disruption to the corporate is reduced. Corporates also benefit by reducing procurement costs and increased credit periods.

In December 2021, CashFlo enhanced its flagship dynamic vendor financing platform by providing milestone-based financing, deep-tier financing, and a corporate treasury-cum-multi-funder platform. By integrating these first-to-market, India-centric features, CashFlo has helped to unlock 5X increase in returns to customers. Heading into 2022, the company continues to be the preferred Supply Chain Finance platform of choice for leading corporates in India.