SMBSTORYJan 4, 2022How invoice-based financing by fintechs is filling the working capital gap among MSMEsWhat bothered MSMEs the most in the last 12 months amidst the COVID-19 stress? The delay in clearance of working capital that they expected to rotate. As per an EY report, a couple of years ago, over Rs 1.8 trillion were trapped in Indian balance sheets in the cash-to-cash (C2C) conversion cycle - stuck with debtors and in inventory.Indian MSMEs have always been managing these large working capital cycles and business exigencies/seasonality accentuates this problem quite often.Large firms have been able to address this working capital issue with efficient working capital facilities from banks and better credit terms from their suppliers, but smaller MSMEs don’t get that. As a result, the C2C cycle of small businesses is 30-50 days more than their larger peers in the same industry.Some industries like pharma, electrical components, and logistics have much longer credit cycles.Read more at SMBSTORY
What bothered MSMEs the most in the last 12 months amidst the COVID-19 stress? The delay in clearance of working capital that they expected to rotate. As per an EY report, a couple of years ago, over Rs 1.8 trillion were trapped in Indian balance sheets in the cash-to-cash (C2C) conversion cycle - stuck with debtors and in inventory.Indian MSMEs have always been managing these large working capital cycles and business exigencies/seasonality accentuates this problem quite often.Large firms have been able to address this working capital issue with efficient working capital facilities from banks and better credit terms from their suppliers, but smaller MSMEs don’t get that. As a result, the C2C cycle of small businesses is 30-50 days more than their larger peers in the same industry.Some industries like pharma, electrical components, and logistics have much longer credit cycles.Read more at SMBSTORY
