According to Investopedia, Supply chain finance (SCF) is a term describing a set of technology-based solutions that aim to lower financing costs and improve business efficiency for buyers and sellers linked in a sales transaction. SCF methodologies work by automating transactions and tracking invoice approval and settlement processes from initiation to completion. Under this paradigm, buyers agree to approve their suppliers’ invoices for financing by a bank or other outside financier–often referred to as “factors.” And by providing short-term credit that optimises working capital and provides liquidity to both parties, SCF offers distinct advantages to all participants. While suppliers gain quicker access to money they are owed, buyers get more time to pay off their balances. On either side of the equation, the parties can use cash for other projects to keep their operations running smoothly.
Supply Chain Financing plays a vital role in minimising the payment hustle on the buyer as well as risk on the seller’s end. Several financial institutions, banks and credit facilities offer companies, SMEs and corporations finance to cover supplier expenses.
Supply Chain Financing In FMCG Sector
Supply chain financing in the FMCG Sector is mainly limited to FMCG manufacturers availing solutions to extend credit periods to pay their suppliers. However, with Minko, this is changing. Minko, a fintech startup, is financing the entire supply chain from FMCG Brand to the distributor and from distributors to retailers. Minko enables brands and their distribution network partners to sell more to end consumers.
How Does Minko Supply Chain Work?
Minko aims to enable every Pharmaceutical and FMCG Brand with complete Supply Chain Solutions. We at Minko connect with brands and distribution partners like super stockists, wholesalers and distributors to get onboarded with Minko. Minko allows these distribution network partners to avail of credit for short-term through a simple invoice integrated mobile app. We process their credit requirements through leading NBFCs and Banks. As a result, brands and FMCG Manufacturing companies get their payments on time and simultaneously solve their cycle of working capital crunch. All these benefits without compromising the credit amount and period given to the stockists, distributors and retailers.
In a nutshell, supply chain financing solves the market’s money crunch or cash gap. With Minko, we solve it for the entire supply chain, including the bottom of the pyramid – retailers and shopkeepers.