Highlighting that many Small and Medium Enterprises (SMEs) of Kochi are facing severe issues with managing their working capital because of a lack of adequate financing options, Drip Capital has come out with collateral-free post-shipment finance to Indian exporters, said Drip Capital.
Regional Sales Manager, Drip Capital, Nath Kakani said this at a seminar organized by Drip Capital, in association with the Federation of Indian Export Organisations (FIEO) on the topic ‘Interactive sessions on Export Factoring: Easy access to unsecured finance for SME Exporters’.
He said, “There are many small and medium industrial units in and around Kochi. 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.”
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, it added.
Release further defining the pros of Kochi said, “Kochi is widely renowned as the financial and commercial capital of Kerala. Exports and allied activities contribute prominently to the economy of the city. Cochin Port takes care of export and import of container cargo and its terminal out of Vallarpadam is the largest transhipment terminal in India.”
Further said that Kochi as a city is a major exporter of spices and is home to the International Pepper Exchange, a global trade center for black pepper trade.
According to the 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.
Demands for collateral, long processing times, heavy paperwork burden, and other such factors contribute towards making working capital highly inaccessible for SMEs, it said.
Institutions like factoring firms and 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, it mentioned.
Release said that 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.