Surat, Feb 15 (KNN) Trade finance firm Drip Capital apprised the SME exporters in Surat about the alternative working capital solutions like invoice factoring process.

They had organized a seminar on ‘Interactive sessions on Export Factoring: Easy access to unsecured finance for SME Exporters’, in association with Federation of Indian Export Organizations (FIEO).

According to Drip Capital release “SMEs account for 40% of India’s total export volumes but are some of the most under served when it comes to working capital provisions. With Demands for collateral, long processing times, heavy paperwork burden, and other such factors contribute towards making working capital highly inaccessible for SMEs. Institutions like factoring firms and NBFCs offer alternative financing solutions.”

However, it said that many SME exporters are unaware of these offerings and need to be educated about the same. One of the easiest such alternative methods is invoice factoring.

Presented by Abhishek Sampat, Director, Business Development, Drip Capital, the event was graced by by Abhimaniu Sharma, Dy. DGFT, Surat, D. R. Patel, General Manager, District Industries Center, Government of Gujarat and Jayprakash Goel, Head, FIEO Gujarat and SME exporters’ community from Surat.

Explaining invoice factoring process, Sampat said “At its most basic, invoice factoring is a process of procuring finance by selling the invoices of your transactions to a third party known as the factor. Based on your transaction history and other parameters, the factor gives the seller (the exporter) a credit line which they can then use to finance further transactions to other buyers (importers).”

He asserted that in most cases, the seller gets 80% of their invoice value upfront from the factor (often without the need for collateral), and the remaining 20% minus the factor’s fees and interest -- after the buyer transfers the value of the invoice to the factor.

He said “With over 800 cloth wholesalers in Surat, the annual turnover of the city in terms of textile business is approximately Rs 500 crores. Surat is also a major hub of diamond cutting and polishing. Around the world, 8 out of 10 diamonds in the market were cut and polished in Surat, and this industry contributes US$10 billion to India’s annual exports.

These factors combine to make a bustling hub of the SME exporter ecosystem. However, many of these SMEs face severe issues with managing their working capital because of a lack of adequate financing options, Sampat pointed.

In order to solve this problem, Drip Capital provides collateral-freepost-shipment finance to Indian exporters with instant approvals and minimal documentation.

Renowned as the textile hub of India, Surat is famous for its cotton mills and Zari Craft. The city has more than 381 dyeing and printing mills and 41,000 power loom units. As the largest manufacturer of clothes in India, Surat produces 9 million metres of fabric annually, accounting for 60% of the total polyester cloth production across India. The key focus of the city and state administration now is to increase the textile exports to other parts of the world.

Drip Capital is a US-based trade finance firm, providing collateral-free post-shipment finance to SME exporters with instant approvals and minimal documentation. (KNN/YV)