Mumbai, June 28 (KNN) Trade finance firm Drip Capital apprised the Small and Medium Enterprises (SMEs) Rubber Exporters’ in Mumbai about the alternative working capital solutions like invoice factoring process.

They had organized a seminar on  the topic ‘Interactive sessions on Export Factoring: Easy access to unsecured finance for SME Exporters’ presented by Ankur Khetan, Director, Business Development, India, Drip Capital.

According to Drip Capital release, SMEs account for 45% of India’s total export volumes but are most underserved when it comes to working capital provisions. 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 Non-Banking Financial Companies (NBFCs) offer alternative financing solutions; however, 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.

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).

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.

The rubber and rubber goods sectors are dominated by MSME businesses. India is currently the sixth-largest producer of natural rubber in the world, and a large chunk of this production is exported overseas.

 In FY2018-19 alone, India exported rubber worth US$3.2 billion, and the sector has seen a CAGR of 9% over the last decade. MSME exporters have been crucial to this growth, contributing US$352 million worth of trade in FY 2018-19. Most of these exports make their way to the US, which accounts for 16% of all rubber trade from India.

, Director, Business Development, India, Drip Capital Ankur Khetan said that there are many small and medium industrial units in and around Mumbai. However, these SMEs contribute about 33% of the city’s outbound shipments, less than the country average of 48%. An important cause for this is that 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 aims to educate exporters across industries and verticals about the great potential offered by invoice factoring and other trade finance services. The Mumbai seminar, in conjunction with AIRIA, served to reinforce the potential of the solutions provided to exporters by Drip Capital.

Drip Capital’s plans include expanding into new markets across the world and leveraging technology to solve multiple problems commonly faced by exporters. Moving beyond trade finance, the company aims to continue leveraging data, technology, analytics, and a team of highly motivated professionals to become a leader in the global export ecosystem.