Invoicemart offers quick working capital to MSMEs boosting their financial growth

The Micro, Small, and Medium Enterprises (MSMEs) in India often face a cash flow disturbance due to factors like non-availability of funds, post-dated cheques, late payments, and many more. The MSMEs have an immense potential for growth, however, they require a steady flow of cash. The need of the hour is to empower them with solutions to unlock its working capital without the hassle of applying for loans.

To enhance the financial growth of the MSMEs, Reserve Bank of India has launched the TReDS (Trade Receivables Discounting System) initiative, a joint venture between Axis Bank and mjunction services (a 50:50 venture promoted by TATA Steel and SAIL) that operates ‘Invoicemart’.

Launched in 2017 in Thane, Mumbai, Invoicemart is a digital invoice discounting platform which connects MSME suppliers and their corporate buyers to multiple financiers. Through Invoicemart the MSMEs are able to discount their invoices after selling them to the financiers thus, getting an immediate payment for their invoices thereby, creating a positive impact on the business.

Kalyan Basu, MD and CEO of A.TReDS Ltd. says,

Invoicemart is a platform that connects suppliers and buyers to the financiers to enable quick payments for invoices at competitive rates. Invoicemart has till now discounted 1,80,000 invoices amounting to 2.5k crore. It is the most favourable to MSMEs for improving their business ecosystem as it helps the enterprises to get their money fast.”

How it works

MSMEs to discount their invoice primarily have to register on the Invoicemart platform. For registration, the MSMEs are required to pay the registration fee after which they can upload their invoice.

Once the invoice is uploaded, it goes to the buyer, where it is accepted and then the financier bids for the invoice on the basis of risk assessment at the best possible rate. The MSME or seller then accepts the bid and financier disburse the funds to the seller. On an average, MSMEs work with 8.5 percent interest on their invoices from financiers, according to Kalyan Basu.

The amount is credited to the seller within 48 hours of invoice acceptance. Kalyan Basu says, “The process is really hassle free, it is not cumbersome. The seller just has to sign up without any collateral or document and get their invoices discounted thereby, reducing their working capital cycle to a great extent.”

Invoicemart is helping MSMEs to get into the digital financing mode. “All of them do not have bank accounts and a lot of them refrain from digital transactions. Our team introduces the product and handhold them on how to register on the platform and conduct the transaction. We take them on screen sharing and explain them step-by-step process. Our aim is to educate each and every participant,” he adds. Invoicemart employs around 35 employees in its Thane office.

Till now 1700 MSMEs have registered in Invoicemart platform with, 195 buyers and 24 financiers including State Bank of India (SBI), Lakshmi Vilas Bank, The Development Bank of Singapore (DBS) and many more.

MSMEs responses

The main objective of the Invoicemart is to unlock the working capital of MSMEs with no debt. Daniel.S of Noble Diagnostics and Surgicals says, “Invoicemart allows us access to working capital within 48 hours whioch is vital for the growth of our business. The platform also lets us choose our financiers from a range of banks who offer us a much lower interest rate. Since, the entire transaction is online, it saves us the trouble of paperwork.

GDR Cylinders from Telangana say, “We joined Invoicemart in January 2019 and we have since then processed more than Rs 3.35 crore worth of invoices already. Being on the platform has helped us find working capital within three to five working days and they’ve helped us consistently with the on-boarding process as well as regular organisational information.”

Revenue streams

Invoicemart has two revenue streams. The first form of revenue is the registration fee, which the platform charges at the time of sign up to cover their out-of-pocket expenses. However, its primary source of revenue is the transaction fee which it charges at the time of disbursement which is based on the amount of transaction being done.

Major Challenges

Kalyan Basu explains that Invoicemart is a regulated entity and responsible to do KYC for MSMEs which is exactly what the banks are responsible to do. However, being a small organisation in its outreach, incorporating KYC is definitely a challenge which they are facing. “KYC cannot be automated and we need people on the ground for it. Reaching out to all MSME and getting the documentation done under KYC guidelines is a major challenge,” he says.

He further adds that procuring the GST data of the invoices is also one of the challenges which Invoicemart goes through. As the platform do not discount non GSTin invoices it becomes a hassle to figure out the invoices which are GSTin paid.

Invoicemart operates across India and have Business Development officials in Kolkata, Delhi, Pune, Bengaluru, Hyderabad, Chennai and Ahmedabad. The platform has recently crossed Rs. 2,500 crores in business volumes and became the first TReDS platform to do so.