How Cashinvoice is Unlocking Growth potential by Empowering MSMEs with Digital Supply Chain Finance Solutions

CXOToday has engaged in an exclusive interview with Mr. Arun Poojari – Co-founder and CEO of Cashinvoice

Q1. What are the challenges you are solving for small businesses with Cashinvoice?

• Cashinvoice is a digital supply chain financing platform that enables comprehensive payable and receivable management solutions that digitize the way businesses pay and get paid. Launched in 2018, Cashinvoice optimizes working capital efficiently through digitalisation of invoice to cash processes, and leveraging supply chain finance to incentivize payables and receivables management.
• The vast majority of MSMEs are denied low-cost financing from the traditional banking system. They are forced to rely on informal lenders to meet their financing needs, often at exorbitant rates. For MSMEs, the direct result of this credit gap is a vicious cycle of high costs, low profitability, stunted growth, and an inability to withstand even minor economic shocks.
• Cashinvoice provides supply chain financing solutions (SCF), which helps bridge the trust gap by giving lenders additional tools to manage credit risk and expand the scope of financing to include large pools of poorly understood MSMEs. SCF provides technology-based risk mitigation techniques to help buyers and sellers in a trade transaction reduce financing costs and improve business efficiency. It enables MSMEs to obtain larger amounts of bank credit based on the strength and volume of their actual trade transactions & supply chain relationship, at rates significantly lower than what they would receive based on the strength of their standalone business and finances. Corporates benefit from SCF as a larger proportion of their supply chain gains access to cheaper and more reliable sources of liquidity. This ensures an uninterrupted and predictable flow of materials and services from their smallest suppliers to timely delivery of finished goods to their end customers.

Q2. What new business and technological innovations and initiatives has your company implemented or plans to implement in order to grow overall business in the current fiscal year?

• Cashinvoice’s technology infrastructure has enabled several anchors to facilitate seamless working capital financing solutions for their supply chain ecosystem at competitive terms. On the digital front, the company automates processes, leverages data, and employs deeper insights to improve working capital management. We provide comprehensive payable and receivable management solutions that digitize the way businesses pay and get paid.
• Additionally, financiers are leveraging our tech infrastructure to digitize their supply chain finance operations and penetrate deeper into their anchor relationship’s supply chain ecosystems, multiplying the reach and extending financial inclusion to more small businesses.

Q3. What are your targets and plans, including branch expansion and rationalization plans, for the current FY?

• We are constantly looking for ways to improve credit flow within the business ecosystem in order to ensure an uninterrupted supply chain among various stakeholders. Access to timely MSME funding, complex regulatory procedures, and a lack of financial knowledge are just a few of the challenges that MSMEs face in India.
• We are growing in tandem with the MSME industry. The company is excited to reach out to more small businesses and assist them in their growth and success. The goal for the coming years is to focus more on digitalization and the quick and easy adoption of digital onboarding and Account Aggregator Frameworks. The AA framework is expected to provide significant efficiency gains as well as the opportunity to accelerate the country’s financial inclusion agenda. It will have an impact on credit distribution rails as well as improve the ability to assess and underwrite new to credit (NTC) and underbanked customers.

Q4. How are you utilizing Technology to extend financial inclusion?

• Technology is a powerful enabler to level the playing field and facilitate small businesses in accessing financing solutions in a cost- effective and time-efficient manner. At Cashinvoice, we use Artificial Intelligence to analyze various data points including ledger data and filter creditworthy small businesses with good trade reputation on ground so lenders can underwrite with confidence backed by data. We use AI-driven applications to accelerate underwriting for SMEs with the help of digital scorecards. This helps speed-up the loan approval processes and enable small businesses to access timely working capital financing. The digital nature of the platform enables hassle free automated onboarding and minimizes the paperwork. Additionally, Fintechs are leveraging technology in the lending space with custom-made ML models using alternate data to overcome challenges due to lack of credit history or low credit scores. This is helping banks and NBFCs to move from an asset-based to cash flow-based lending model. AI provides deeper insights into repayment patterns and predictions on seasonality and defaults using alternate data like GST data, inventory, transaction history, domestic economic factors, sectoral trends, etc.

Q5. What kind of traction have you received on the Cashinvoice platform till date?

• During FY 22-23, we surpassed a massive 50 billion throughput on the platform. The increase in transaction volumes in 2023 represents a resurgence and restart of economic activity. We have also entered into some great partnerships with large corporates like Patanjali Foods to provide timely and affordable working capital to a pool of their dealer network. Additionally, NBFCs such as Cholamandam Finance and Hero Fincorp are onboarded that help penetrate deep and fast into supply chain finance programs, enabling liquidity to vendor ecosystems and credit to small businesses in India. We intend and will continue to work towards bridging the 20-25 lakh crore credit gap in the MSME segment with this growth.

Q6. What are key trends in supply chain financing to look out for in the upcoming years?

• The digital onboarding process and use of technology has enabled access to credit for even the last mile MSMEs widening the scope of credit in the economy. Dealers experience a hassle-free onboarding, sanction, and end-to-end digital financing experience. Moreover, The AA framework is expected to bring significant efficiency benefits as well as the opportunity to propel the country’s financial inclusion agenda. It will have an impact on the credit distribution rails as well as improve the ability to assess and underwrite new to credit (NTC) and underbanked customers. The use of new-age technology has streamlined the SCF process and made the entire onboarding process paperless. Right from supplier application forms to KYCs, the credit assessment, loan sanction, and disbursement requests, digital documentation has reduced the need for physical paperwork. Big data, advanced analytics and automation will be the pillars of supply chain finance. Artificial intelligence and machine learning will have a much greater impact, as processing huge datasets in real time demands these capabilities.