New Delhi, Apr 17 (KNN) Trade finance firm Drip Capital apprised the SME exporters in Delhi 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 underserved 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 Vikas Yadav, Senior Business Development Manager, Drip Capital, the event was graced by Sunita Tatwal, FIEO and SME exporters from the Capital.

Explaining invoice factoring process, Yadav 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 “The national capital of India’s economy stands as the 13th largest state and union territory. In 2017-18, the tertiary sector recorded a contribution of 85% of Delhi’s GSDP followed by the secondary and primary sectors at 12% and 3% respectively.

Overall, the services sector recorded an annual growth of 7.3%. A majority of the contribution of the economy comes from a large number of MSMEs in Delhi. Amongst the export produces, apparel and clothing accessories including shawls, mufflers, veils and other products of the like. Also, leather products including jackets, shoes, bags, wallets and belts of the many are majorly exported items from Delhi, he added.

Speaking at the event, he said “There are many small and medium industrial units in and around Delhi. However, many of these SMEs face severe issues with managing their working capital because of a lack of adequate financing options.”

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

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