Over the last few years, many businesses, including MSMEs had to deal with turbulent times due to the global pandemic and economic breakdowns that intensified the vulnerabilities in the supply chains. A report by the Asian Development Bank Institute on the impact of COVID-19 on MSMEs in Asia stated that around 46% of MSMEs in India experienced cash shortages in 2020. Despite being a major contributor to the Indian economy, the MSME sector usually faces many challenges in acquiring funding and supply chain financing. Other issues in the supply chain involve dealing with multiple vendors, selecting the right supplier, moving and storing goods, and tracking payments at every stage.

The supply chain funding landscape is undergoing a major transformation with innovative business financing companies that are integrating technology and supply chain finance. They are transforming the supply chain management landscape through increasing access to financing services, streamlining the procurement process, increasing liquidity, and enhancing inventory management.

Impact of Tech-enabled Transformations on Supply Chain Financing

Both buyers and sellers can benefit from supply chain financing services. Buyers can add more flexibility through extended payment terms, while suppliers can have better control over their cash flow. This leads to an improvement in the relationship between buyers and suppliers. Let us take a look at other ways that tech-enabled business financing companies are transforming the supply chain.

1) Simplified procurement process

Procurement is a key process in your supply chain, and optimization at this stage can help you save on operational costs. Business financing companies are enabling faster and more streamlined procurement through solutions like e-cataloging, digital procurement workflows, and online order processing systems. Electronics catalogs offer a unified view of all supplier information on an online platform which leads to more visibility for buyers into all available products and pricing. With the improved transparency into product pricing provided by e-catalogs, suppliers tend to provide competitive standardized quotes. 

Business financing companies have also made it easier to track orders and inventory through digital procurement platforms. The digitalization of procurement has given MSMEs and other businesses the benefits of seamlessly tracking inventory in real-time, maximizing stock availability, customizing delivery schedules, and automating purchase orders.

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2) Improved working capital

Working capital usually gets tied up for months as the product moves through the supply chain. Business financing companies are speeding up access to working capital at each stage of your supply chain and providing an innovative way to manage liquidity risk. Business financing services help companies leverage their receivables to acquire funding. Since small businesses struggle with raising their credit scores as they do not have a long credit history, business financing companies also provide risk calculation services that factor in other data like company profits, the likelihood of customer payments, industry outlook, etc. Unlike traditional lenders that require collateral for acquiring funding for your business, supply chain finance enables collateral-free loans. There are many financial instruments under supply chain financing, like invoice discounting and invoice factoring. The lenders, in this case, the tech-enabled business financing companies, usually charge processing and discounting fees when furnishing the required funds to your business.

3) Increased availability of financing solutions

The integration of technology with business financing has enabled greater access to financing services. The conventional method of financing involves a lot of paperwork and complex documentation to obtain loans and funding. This traditional approach also requires businesses to jump through a lot of regulatory hoops, slowing down business growth. The digitalization of the financing system, along with supply chain financing services, has eliminated the need for complex documentation. It has also made it possible for MSMEs to have greater access to diverse financial instruments and accelerate funding through online platforms.

4) Streamlined inventory management

Inventory management involves tracking the flow of products and ensuring product availability according to the demand. Technology-fuelled supply chain solutions can help you better manage your inventory through real-time data management, centralized and online inventory systems, and auto-replenishment systems to avoid overstocking and understocking. Such an inventory management system is helping businesses acquire increased visibility and accuracy in their supply chain. Digital inventory management systems are also improving order fulfillment and procurement processes as they give a bird’s eye view of current inventory levels and automate the replenishment process. Such a streamlined inventory process leverages real-time and historical business data to automate the demand and production planning processes. With such systems, you can drastically reduce the probability of your business running out of stock.

Tech-enabled supply chain marketplaces enable all companies - big or small to thrive over the long run. Supply chain financing are transforming the traditional supply chain and helping companies develop a competitive advantage.

At Bizongo, we are at the forefront of this transformation and have built dedicated tech solutions to support various stages of the supply chain. Our Procure Live platform can help you easily automate your supply chain and manage inventory, while Partner Hub can help streamline your order management and payment tracking process.

Contact us to know more about our solutions and scale new heights in your supply chain journey.