Veefin Solutions, the technology provider for the supply chain financing company, has more than doubled disbursements through its suite of products since January 2022 and crossed $12 billion in annualised disbursements globally in February.
The monthly supply chain financing through the platform had touched $1.3 billion in February.
SCF is a financing method that focuses on optimising the cash flow within a supply chain. It is designed to providefinancing solutions to the entire supply chain, ranging from the primary borrower to their suppliers and dealers.
In SCF, lenders provide liquidity against invoices from suppliers and dealers, based on the creditworthiness of the parties involved to manage risk.
The goal of SCF is to improve the financial stability of the supply chain by providing faster access to financing and optimising cash flow. The process typically involves collaboration between the parties within the supply chain to streamline the approval process, and SCF solutions are often customized to meet the specific needs of the parties involved.
Raja Debnath, Managing Director and Co-Founder, Veefin Solutions said supply chain financing offers shorter-term loans compared to other SME loans and mitigates the risk of fund diversion as the end-user is closely monitored.
These loans also incorporate early warning triggers that prevent drawdowns when triggered and it highly profitable for lenders.
If a dealer or supplier continues to collaborate with a large corporate entity, the demand for loans or early payments persists, and the acquisition costs can be recouped over time. This contrasts with other SME loans where businesses may not require constant funds, leading to higher acquisition costs, he added.
Also read: Supply chain fintech company Veefin raises $3 million in Series A funding round
SCF is effectively addressing the credit gap for MSMEs. The venture capital and private equity firms have also recognised the potential and invested in SCF fintech/techfin companies. The India stack and digitization initiatives have also played a significant role in SCF’s growth. With continuous innovation from fintech and tech players, the SCF market is expected to grow at a rate of around 100 per cent annually over the next five years, said Debnath.
“We are working towards unlocking the full potential of SCF and promoting a more inclusive and sustainable future for small and medium-sized enterprises worldwide,” he said.