In an exclusive interview with SME Times, Cashinvoice Founder & CEO Arun Poojari said that despite the launch of recent schemes for the MSME sector, there still remains room to do more as much of the fiscal benefits are in the form of loan guarantees, and not direct credit.

Excerpts of the interview…

Please tell our readers about Cashinvoice and its entrepreneurial journey.

Arun Poojari: SMEs are critical for economic growth because they create jobs and stimulate local manufacturing. In an economy, a robust SMEs sector is a catalyst for driving innovation, domestic demand, long-term economic growth, and inclusive growth. Thus, it’s imperative to ensure a seamless capital flow to avoid a credit gap in the economic structure. With this vision, Cashinvoice was launched in December 2018 and is built by experts with dynamic experience of over 30 years in the SME Lending, Corporate Finance and Supply Chain Finance (SCF). Our team has robust technological expertise backed by deep domain knowledge to offer end-to-end digital solutions to serve small businesses.

We connect SMEs and their corporate clients and the trade ecosystems to provide digital and affordable access to credit against payables and receivables. An easy alternate financing option for both Corporates as well SMEs, Cashinvoice has been able to turn the entire invoicing, discounting and payments system into an incentivised model that provides perks to all. With the growing need and importance of alternative digital lending, especially observed during the second wave, today it is one of the fastest-growing start-ups in the supply chain financing sector, with over Rs. 2000 crores worth of throughput volume and 5 lacs + invoices under their belt in FY 2020-21 alone.  Our list of clients includes some of the biggest conglomerates in India.

What are the services you provide?

Arun Poojari: New age fintechs like supply chain financing solutions are redefining the rules of lending by using alternate transactional data to efficiently originate, assess and monitor borrowers, thus bridging the trust deficit between SMEs and lenders. At Cashinvoice, we already have multiple product offerings oriented for SMEs and Corporates. We have designed product offerings serving each link of the Supply Chain Financing right upto the last mile – small businesses. Some of our offerings include Digital Factoring, Inventory Funding, Retailer Funding etc.

How helpful is your service to SMEs?

Arun Poojari: What multiple waves of COVID have taught us is the feeble nature of credit and financing opportunities that lie for SMEs in India. This is where we come in as a long-term sustainable solution, the supply chain financing ecosystem has proven to be the silver lining for SMEs facing the liquidity crunch. There has been a reduction in NPAs and defaults as compared to projected numbers as SMEs and corporates have whole-heartedly adopted supply chain financing, especially since the onset of the pandemic. In this scenario, we are enabling financial inclusion for micro-enterprises through tech-based processes to build credit insights. Thereby, supporting even the smallest of SMEs in the long tail of the supply chains which enables them to increase their turnover and scale up rapidly. We have so far processed over 700,000 transactions accumulating to Rs. 3000 Cr. Digitization of entire processes which include e-KYC, e-invoice validation, e-signing of documents, etc have served to dramatically bring down the cost of SCF, especially for small value transactions.

What is the present credit scenario in India, particularly in context to MSMEs?

Arun Poojari: As a recent report by the Association of Chartered Certified Accountants, the credit availability for the MSME segment continues to be stressed, with nearly 50.7 million enterprises facing the lack of access to traditional lending challenges. This represents about 80% of the total 63.4 million MSMEs in India. The multiple schemes and a fresh round of economic stimulus package worth Rs 6.29 lakh crores announced on 28 June by Union finance minister to MSMEs was whole-heartedly welcomed, However, there still remains room to do more as much of the fiscal benefits are in the form of loan guarantees, and not direct credit. Many small businesses especially are still underserved as banks still shy away from lending to them.

Much of this is owed to the fact that MSMEs lack financial discipline as expected by the banks. Most of them however have some really good mitigants that can help us get them the credit support they require. That’s the area we are trying to make a difference.

Please share your views on RBI's monetary policy and expected fiscal stimulus by Govt?

Arun Poojari: RBI has been evidently intent on keeping the interest rates low to support the economy at large. This has helped many small businesses to improve their margins by reducing their financial costs. However, RBI has also cut down the growth forecast which is reflective of the on ground situation. Specifically, from MSME perspective, RBI has lent Rs. 50,000 Cr to Financial institutions to lend onward to MSMEs. This if percolated down to the grass root level, should impact the credit flow to the smaller businesses in a big way.

Additionally, the union government recently announced Rs. 1.1 Lakh Crore loan guarantee scheme which we expect largely should be directed at easing the credit to MSMEs.

Please share your future plans.

Arun Poojari: Despite the government and RBIs efforts towards financial inclusion, many SMEs still struggle to avail loans from traditional sources like banks and NBFCs. The objective of the team is to create a difference and make an impact in the SME space by delivering distinctive solutions to address the working capital needs in the simplest form. Cashinvoice is reducing the RoE by bridging the gap between payables and receivables with the help of digital lending and plans to reach Rs. 10,000 crores worth of throughput on its platform by the end of 2021. We are looking at a milestone of helping 1,00,000 SMEs over the next 5 years by meeting their working capital requirements. 2021 is the year of economic recovery and we intend to stand by SMEs in every way possible.