Nagpur, Feb 25 (KNN) Trade finance firm Drip Capital apprised the SME exporters in Nagpur 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 Pushkar Mukewar, Co-founder, Drip Capital, the event was graced by Akshay Shah, Management Executive, FIEO (WR) and SME exporters’ community from Nagpur.

Explaining invoice factoring process, Mukewar 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 “There are more than 900 small and medium industrial units in and around Nagpur. 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, he added.

Being the third-largest city and the winter capital of Maharashtra, Nagpur is a major commercial center for the state’s Vidarbha region. A December 2018 report from global research firm Oxford Economics projected the city to be the fifth-fastest growing city in the world from 2019-2035, with an average growth of 8.41%.

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)