One of India’s largest publicly listed logistics service providers, wanted to achieve a key strategic objective. As they scaled, so too did their large network of vendors. Their supply chain was becoming their key competitive advantage, allowing speed and reliability in moving goods across India.
Our Client had an official credit period of 60 days while the actual payment was made sometimes later. Vendors were borrowing at 18-36% p.a. to address their working capital needs.
Our Client wanted to help their vendors carry out bill discounting and get early payments; and wanted to achieve this at scale, covering as large a proportion of their network as possible.
At over 6000cr in turnover, and coming off years of good financial planning, our Client was cash-rich to a sufficient degree to provide invoice-discounting based early payments without external funding. Additionally, our Client realized that a direct cash discounting program would lead to unhealthy relations over time, and even lead to vendors building the cash discount into price increases. Further, our client’s primary objective was to strengthen their supply chain – which implied maximizing coverage across the vendor base.
CashFlo deployed its proprietary vendor invoice discounting platform across the Client’s supply chain.
Cashflo’s solution brought two advancements over direct cash discounting. The platform’s AI-powered rate discovery mechanism allowed vendors to obtain liquidity when they wanted, at a customized rate that worked for them. The platform was also customized to handle past-due invoices.
The entire process was designed to be digital, seamless and fully automated, with zero manual documentation at transaction level. Together this achieved a win-win condition for the supply chain – vendors able to obtain liquidity on their terms and with minimal operational overhead for the Client.
Our vendors are typically cash-starved so this is a much-needed solution for them. They love the ease of using the platform, and they get access to funding at a rate of their choosing. Cashflo’s rapid time to market has ensured that a majority of our vendors are covered under this program within 2 months. We are looking forward to deploying this program across other verticals as well.”
– Head of Operations,
CFS Business, Logistics Major
The program turned out to be such a big success that within a matter of months, the entire vendor base was covered. Over 50% of vendors are transacting actively on the platform and a massive 25% of all invoiced spends released as early payment.
The direct tangible benefits:
1) Benefit to Client: direct 1% improvement to the bottom, 3X improvement in treasury returns, and with independent liquidity fulfilment for vendors, no risk of discount pass-back into vendor pricing.
2) Benefit to Vendors: Flexibility to discount invoices on their own terms, at affordable rates they are comfortable with, anytime, anywhere at 1-click.