MSME exporters and importers do not have a wide choice of lenders Director Head Marketplaces Vayana Network Kalyan Basu

In an interaction with Urvi Shrivastav, Editorial Manager, BW BFSI; Director and Head, Marketplaces, Vayana Network, Kalyan Basu, talks about the need to loosen the MSME business market, their role in the country’s GDP, and Vanaya Network’s role in facilitating it.

How does Vayana Network bring formal finance to the last mile leading to the formalization of small businesses? What products and services does Vayana Network offer?

At Vayana Network, we believe that every business, big or small, should have timely access to affordable and formal working capital funding sources. Vayana creates supply chain finance programs for companies and their partners (suppliers and resellers), down to the last mile, which can be a kirana store or a sole proprietor run manufacturing unit.

Vayana, with the help of technology and the deep experience of its team in the field, has developed products that make it a positive unit for lenders to finance MSMEs, ultimately reducing the cost of credit. There are two major reasons why traditional lenders do not lend to MSMEs: first, the inability of small businesses to prove their creditworthiness and second, the cost of servicing them. Our cloud-based solutions help banks reduce costs, acquire customers digitally, authenticate transactions digitally and monitor refunds.

Each company has its format for invoices. Vayana has developed systems that convert invoices in any format into readable data for bank systems and a company’s ERP. This ensures digital acceptance of the invoice through Vayana’s platform and disbursement of funds by the financier against invoices accepted by the larger entity.

This basic solution is applied to all trade finance products, regardless of the size and type of business entity.

In addition to the suite of trade finance products, Vayana simplifies monitoring and compliance by offering the following solutions to MSMEs:

1. Utilities for filing GST returns, generating e-Invoices and e-Way Invoices, helping them prepare for credit.

2. Cash flow management solutions help MSMEs automate customer/payor accounts and reconciliations

3. GBS (Good Business Score in collaboration with CRIF), gives MSMEs a detailed analysis of the health of their business based on GST returns.

Last year, Vayana Network received approval in principle to set up an International Trade Finance Platform (ITFS) in GIFT City, Gujarat, which will enable MSMEs and businesses around the world to access the trade finance in the currency of their choice from financiers anywhere in the world. the world.

These trade finance transactions allow small businesses to establish a payment history that helps lenders assess them against cash flow for future financing needs.

How can supply chain finance be an effective solution to address the longstanding challenge of access to capital for MSMEs?

The SCF enables MSMEs to:

1. Access bank finance based on who they are buying from or selling to, rather than the borrower’s standalone risk rating (BEMP) themselves.

2. Access larger volumes of bank credit based on the strength and volume of their business transactions and the best risk profile of the counterparty (which is a medium to large, well-rated company), at rates significantly lower than those they would attract on the strength of their business and their autonomous finances.

3. MSMEs are paid on their invoices, which results in timely payments, ensuring they have funds to finance their purchases.

How can MSMEs financially protect their business?

MSMEs can protect their business financially in the following ways:-

1. Credit is a liability – Any credit or loan taken out by a business is a liability that must be repaid. The interest payments on these loans also reduce its margin and therefore its ability to withstand an unfavorable economic cycle. In these uncertain times, MSMEs need to plan for repayment before taking out more credit.

2. Cautious with cash flow – Supply chain issues are expected to continue over the next couple of years. Business owners need to make sure they don’t end up spending beyond their means by forcing them to tap lines of credit or ODs. They will also have to exercise strict supervision and control over the collections.

3. Inventory Management – ​​With the skyrocketing cost of raw materials and inputs, companies need to plan production on a month-to-month basis, limiting inventory to confirmed orders.

4. Insurance – In these uncertain times, it is important to protect the business and key personnel with adequate insurance. This is an expense worth undertaking to ensure continuity and mitigate risk.

What is the importance of facilitating access to export/import finance for MSMEs?

MSMEs contribute nearly 50% of Indian exports. Many of them have regular and stable business relationships which they have maintained well over the years. And yet, growth has always been a problem for MSMEs, who are often unable to grow and expand their existing business. One reason is that exporting MSMEs are constantly weighing growth opportunities against failure risks.

MSME exporters (and importers) do not have a wide choice of lenders, often limited to their existing banking relationship in their own country. They have little opportunity to discover or be matched with more suitable financiers from other countries or to borrow in foreign currencies at affordable rates. Even when funds are available, the paperwork and documentation can become cumbersome and time-consuming.

By ensuring ease of access and affordability, MSMEs will be able to focus on growing the business, rather than running around for funds. Being the largest employer and a major contributor to exports, their growth and success has a direct impact on the country’s GDP. Over the next few years, exports must contribute more than $1 trillion if India’s economy is to grow to $5 trillion by FY26-27.


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