Digital supply chain finance platform Cashinvoice has partnered with factoring company SBI Global Factors to broad base the use of factoring solutions for MSMEs. With this collaboration, the company is targeting additional credit disbursement of Rs 3,000 crore across over 100 MSMEs in tier 2 and tier 3 areas in the financial year 2024-2025. Cashinvoice said it is also expecting a 20 per cent upsurge in its revenue post integrating the factoring business.
Speaking on the tie-up, Arun Poojari, Founder and CEO of Cashinvoice, said, “The increased demand for MSMEs to find prompt financial solutions to meet their business objectives is propelling the factoring solutions market forward.”
“By combining our technological prowess with SBIGFL’s network and resources, we’re positioned to chart new territory in the invoice financing space while offering innovative factoring solutions for our anchor customers,” he said.
Launched in 2018, Cashinvoice offers invoice discounting to MSME buyers and suppliers of mid and large corporates.
The global factoring services market size is expected to grow to $5,872 billion by 2031. According to Cashinvoice, while India has seen an uptick in this area, particularly after the introduction of the Trade Receivables Discounting System (TReDS), there still exists significant potential for expansion in the domestic market.
Factoring is a concept involving converting receivables or bills into creditworthy assets allowing businesses to access working capital loans while mitigating credit risks. This allows instant cash flow to businesses to settle their payments.
“Cashinvoice’s advanced technology simplifies the creation of scalable factoring portfolios, streamlining the entire process. This breakthrough promises to significantly ease the factoring journey for financiers. Together, with Cashinvoice, we expect to bring a substantial impact in the invoice financing market,” said Bharat Mishra, CEO, SBI Global Factors.
For the uninitiated, the Reserve Bank of India in January 2022 had issued regulations for the amended Factoring Regulation Act, 2011 after the Parliament had passed the Factoring Regulation (amendment) Bill in July 2021. This made around 9,000 NBFCs eligible to participate in the factoring market and help boost cash flow to small businesses.
The amendment had removed earlier guidelines that allowed NBFCs to remain in factoring business only if their financial assets in the factoring arm and income earned from it was over 50 per cent of the company’s gross assets and net income.