udaanCapital disburses ₹4000+ cr in supply chain financing to MSMEs in last two years

udaanCapital, one of India's leading Fintech players, on Wednesday announced that it has facilitated disbursals of over  ₹4,000 crores of working capital to over 2,500 MSME buyers in the last 24 months.

These disbursals were enabled through partnerships with brand partners via udaanCapital’s 'Supply Chain Financing program'. udaanCapital is uniquely positioned to tap the $380 billion working capital opportunity in India’s MSME segment by externalization of its core capabilities of providing credit to retailers on udaan, India’s largest B2B e-commerce company.

udaanCapital has also crossed a milestone of onboarding 100 active brand partners on its Supply Chain Financing program for MSME distributors and retailers.

In India, a large gap exists in trade financing, especially in Tier 2 and 3 towns. This requirement is generally funded through the informal trade credit channels extended by manufacturers and brands. Further, there has been a constant push by large corporates and regional brands for rural market penetration, leading to fragmented distribution channels and challenges of timely dues collections in small markets. Therefore, both regional and national brands are looking at partnering with financial institutions to increase access to formal working capital for their buyers.

This also helps brands to manage their working capital requirements by reducing the debtors' payment cycle and significantly limiting their credit risk. Further, it frees up brands' sales team bandwidth from collection hassles. udaanCapital’s lending program facilitates the extension of credit by bringing together lenders and borrowers and leverages in-house digital underwriting and extensive collection capabilities across 8000+pin codes.

This program facilitates the extension of working capital to the smaller buyers from Tier 2, 3,4 cities in India. In addition to enabling a faster sales rotation and top-line growth for the brands, the Supply Chain Financing program is also engineered to incentivize borrowers to repay faster by offering a flexible cash discount structure in partnership with brands, which helps brands to solve the problem of payment discipline.

Faster repayments then enable faster billing to distributors which is a direct impact to the top line of the brand. udaanCapital has demonstrated a clear impact on the revenue and profitability of its partner brands by bringing the bad debts to near zero and improving the payment cycle by an average of 20% - 30%.

udaanCapital’s lending program offers a tech-enabled invoice financing platform that provides access to affordable working capital to MSME buyers at the click of a button and also eliminates the receivables of brands. udaanCapital, while partnering with brands to offer working capital finance to their distributors and dealers, has also started to cater to the financing requirements of the downstream retailers by facilitating the extension of credit limits up instantaneously.

This creates a robust product offering for any brand looking to solve the working capital requirements of their entire distribution network and eliminate the risk of bad debts in their business. Chaitanya Adapa, Head – udaanCapital said, "Funding receivables and managing them is an industrywide problem and we have witnessed strong demand from brands across mobile phones, consumer electronics, appliances, hardware, electricals, and other categories for our program. We are glad to have been able to help our brand partners reduce and eliminate receivables and focus more of their energies on core business."