Supply Chain Financing

The Challenge

To grow MSME credit portfolios, financial institutions face:
• High client origination and underwriting costs.
• Insufficient and unreliable information for assessing and managing risks.
• MSMEs’ lack of adequate or sufficient collateral from clients.

The Opportunity

Supply chains are the key link to tackle these issues, as suppliers:
• Provide the majority of MSME financing needs.
• Visit clients frequently, gathering client and market information.
• Have a highly efficient credit mechanism (part of the sales process).
• Have a strong position when collecting past-due credit because of the close and revolving nature of their business relationship with MSME customers.

The Solution 

We have developed a solution that:
• Allows financial institutions to purchase a large number of small supplier-originated credits (invoices).
• Leverages the suppliers’ distribution channel to generate and monitor credit.
• Utilizes portfolio-based lending and credit-scoring technologies to manage risks.

The solution benefits all stakeholders because it:
• Relies on the suppliers’ distribution channel to efficiently originate credit.
• Diversifies the risk and lowers capital requirements for financial institutions.
• Uses invoice payment history to better predict default rates.
• Uses the cash flow from validated invoices as collateral.

Our solutions are flexible, locally managed and can be adapted to different market and regulatory environments.