Dissertation Report

On

“Supply Chain Finance: An Invoice Bill

Discounting and Finance Solution for the Small
Businesses of Indian Economy”

Prepared By
Ms. Jayeeta Das
Roll no. 18dm052
Batch 2018-20

Under the guidance of

Prof. Divya Gupta

As a partial fulfilment of PGDM Program of IMIS

Institute of Management &Information Science,
Bhubaneswar
 CONTENT
Declaration
Acknowledgement
Chapter 1
Introduction
1.1 Research Design
1.2 Abstract
Chapter 2
Background of the Study
2.1 what is Supply Chain Finance?
2.2 Working Capital Policies
2.3 Major Market Players
2.4 SCF Offerings
2.5 Opportunities and Challenges

Chapter 3
SCF for small businesses
3.1 Need for SCF by small businesses
3.2 SCF Instruments
3.3 Technology as a Saviour

Chapter 4
Findings, Conclusion and Recommendation
4.1 Findings
4.2 Conclusion and Recommendation
Chapter 5
Reference
 DECLARATION

I, Jayeeta Das, student of PGDM Term VI, studying at Institute of

Management & Information Science, Bhubaneswar, hereby declare
that the dissertation report on the topic “Supply chain finance: An
invoice bill discounting and finance solution for small businesses in
Indian economy” submitted in complete fulfilment of PGDM Program
is the original work conducted by me.

The information and the data given in the report is authentic to the
best of my knowledge.

This dissertation report is not being submitted to any other University

for award of any other Degree, Diploma and Fellowship.

Jayeeta Das
(Name of the student)
 ACKNOWLEDMENT

With the blessings of God, I take the opportunity with great pleasure,
a deep sense of gratitude and profound thanks to everyone who have
spared their valuable time and giving me their co-operation to make
this project successful.

I would like to express my sincere thanks to Prof. Divya Gupta

(Dean Academics) for her continuous efforts, and proper guidance,
supervision and generous co-operation throughout this work which
enabled me to present this project report.

I would also like to thank my parents for their constant help, support
and coordination which helped me a lot. Special thanks have to be
reserved for all the respondents for providing information and
extending full support.
 Chapter 1
INTRODUCTION

1.1 RESEARCH
DESIGN Title of the study
The title of the study is “Supply Chain Finance: An Invoice Bill
Discounting and Finance Solution for the Small Businesses of Indian
Economy”.
Objective of the study
 The objective of the study is to understand how bringing
together finance and supply chain operations can make a
company more operationally savvy and improve financial
efficiency.
 Understanding the opportunities and challenges of
implementing SCF for small businesses in India.
 How SCF can become opportunities for banks in India.
 The key purpose was to get perception of SCF among the
companies and to see if technology infusion has changed the
way of working of SCF.

Type of Research
The research study is a basic or fundamental research as it is intended
to expand the boundaries of knowledge and is based on both historical
and current data.
Historical research is one which uses past or historical sources such
as documents, annual reports, financial statements, articles etc. to
study the theoretical concept. Before you begin new research, you
 should start with a thorough review of what others have already
done.

Not only does this help us get up-to-date with current research in our
area of interest, but it also typically leads us to examples of useful
databases that are available, commonly used analysis methods, and
ideas for ways to present our findings.

Collection of Data
Information expressed in some quantitative form is called Data. Data
is of two types- primary data and secondary data.
Primary Data- The data which is collected for the first time and
is original in character is called primary data.
The primary data was collected through interaction with the company
staff through survey and interviews.
Secondary Data- The secondary data is one which is already
available. Secondary data sources include information retrieved
through pre-existing sources: research articles, Internet or library
searches, etc.

Limitation of the study

 The fact that small and medium enterprises (except one) did not
respond to the survey.
 Lack of appropriate information due to issues of
maintaining confidentiality.
1.2 ABSTRACT
India’s Micro Small & Medium Enterprises (MSME) sector plays an
important role in currently contributing to 29 percent of India’s GDP
and 50 percent of exports while employing 110 million people. It is
the vision of the Union Minister for MSME, Nitin Gadkari, to
increase the contribution of this sector to over 50 percent of India’s
GDP and exports to 75 percent. However, this sector according to a
UK Sinha- led RBI panel report, has a total unserved credit market
from mainstream lenders of around Rs 20-25 trillion, out of which
around 50 percent is for working capital needs. These MSMEs will
not be able to grow and flourish unless this credit gap is serviced
more cost- effectively and efficiently. With this huge credit
opportunity and the thrust on MSME lending, it can be served by
offering supply chain financing (SCF) services to lending efficiently
and prudently.
Supply Chain Finance in a B2B environment, is at its core, an
arrangement wherein an organisation gets its supplier’s payments
financed by an external financier. This greatly enhances the access
that MSMEs have with far larger corporates and provides them with
access to working capital integral for their operations at far lower
costs than traditionally possible. SCF for working capital is much
safer in the sense that there are greater transactional controls. For
example, it offers control over end-use of the funds, trapping of sales
collections, enforcing of Stop Supply and even short-term credit
against a valid trade. Apart from this it also increases opportunities to
cross-sell for financial institutions. Mr Sinha’s report also suggests
implementing cash flow based lending, invoice factoring and suggests
leveraging Goods and Services Tax Network (GSTN) data as an
enabler in due diligence.
However, several factors stunt the growth of MSME SCF lending in
our country. Despite benefits, Supply Chain Finance has not picked
up in the country as compared to working capital finance, because of
a lack of digitisation, which in turn hampers the assessment of the
borrower and collateral provided. Further, there is no standardisation
or digitisation in invoice and Purchase Order (PO) formats across
MSMEs. Moreover, the transactions which take place tend to be high
in volume but of low value, and when not digital these drive costs up
and reduce the efficiency of the process. Digitisation itself remains
the answer to overcome these impediments. MSME SCF lending can
be made attractive for lenders by digitising the entire process right
from assessment to lending to repayment.
Partnerships with Fintech companies who understand the GST and
SCF domains are extremely advantageous for financiers. Such
companies use technology and leverage the invoice and E-Way Bill
data available with GSTN for assessment, along with soon to be
launched initiatives like public credit registry and account aggregation
services. Further, these Fintech companies help digitally establish the
trade relationship/the proof of delivery of goods between the Buyer
and the Seller using GSTN. Also, they digitise the end to end
transaction workflows by allowing electronic invoices/POs and
acceptances by digitally signing the same.
Platforms such as TReDS can also collaborate with GSTN through
licensed GST Suvidha providers (GSPs) to increase their financing
coverage to first-tier suppliers and dealers as well as second-tier and
beyond.
Recently, there have been many initiatives taken up by the
Government to increase lending to MSMEs through the formal sector.
These include the launch of tools such as Trades Receivable
Exchange platforms (TReDS). This primarily focuses on enabling the
financing of trade receivables of MSMEs through multiple financiers.
It also discounts invoices of MSME sellers raised against large
corporates, thereby allowing them to reduce their working capital
needs and prevent a cash crush situation. There have also been
suggestions for this platform to collaborate with Goods and Services
Tax Network (GSTN).
Steps have also been taken to launch a Public Credit Registry as well
as account aggregation services. The Government has also been
swiftly implementing the suggestions of the RBI formed high-level
committee under Mr. Sinha. They have also looked at incentivising
and easing
digital payments, offered large cuts in corporate income tax rates and
have even further rationalised GST rates.
In conclusion, supply chain financing to MSMEs digitally, ensures an
increase in credit coverage, reduction in cost and collateral needs of
the borrowers, while increasing the credit quality of the loans. In this
manner, supply chain relationships will become more strategic and
stickier and subsequently, banks too will get new customers. This
will, in turn, have a multiplier effect on the economy, making it more
resilient to the non-performing asset (NPA) problem, formalising it,
increasing compliance, increasing government revenue and even
reducing tax rates.
Chapter 2
BACKGROUND OF THE STUDY

2.1 WHAT IS SUPPLY CHAIN FINANCE?

As global supply chain stretch across the globe with multinational
buyers on one side and a diverse group of suppliers in numerous
countries on the other, corporations are under pressure to unlock the
working capital trapped in their supply chain.
Supply chain finance, also known as supplier finance or reverse
factoring, is a set of solutions that optimizes the cash flow by
allowing businesses to lengthen their payment terms to their suppliers
while providing the option for their large and SME suppliers to get
paid early. This results in a win win situation for the buyer and
supplier. The buyer optimizes the working capital and seller generates
the additio0mnal operating cash flow, thus minimizing risk across the
supply chain.
Unlike traditional factoring where a supplier wants to finance its
receivables, SCF is a financing solution initiated by the ordering party
in order to help its suppliers to finance its receivables more easily and
at a lower interest rates.
Traditional finance vs SCF
In traditional finance, funding sources are cash rich buyers and
buyer’s working capital. The financing rates are typically higher and
take more time in payment. This involves high risks for banks due to
open end use of funds.
SCF is a combination of service and technology solutions that link
buyers, suppliers and finance providers to improve the visibility,
financing cost, availability, and delivery of cash when supply chain
events take place. The source of funding involves buyer/suppliers,
buyer-bank or supplier-bank, third party and financial institutions.
The rate of interest are lower and payment timings are also faster,
involving lower credit risk.

Mechanism of supply chain finance

“SCF requires the involvement of an SCF platform and an external
finance provider who settles supplier invoices in advance of the
invoice maturity date, for a lower financing cost than the suppliers’
own source of funds. This benefit is then shared among the parties.”
The mechanism of supply chain finance after ordering from the
supplier (1), the supplier then fulfils the order and invoices the buyers
(2). The buyer then approves the supplier’s invoices and confirms that
it will pay the financial institution for these at invoice maturity (3).
The supplier sells(discounts) the invoices to the financial institution at
a predetermined discount rate (4) and receives the funds straight away
(5). The buyer pays the financial institution as agreed at maturity of
the invoice (6). In parallel to the SCF facility, the buyer is typically
able to negotiate better terms and/or prices with the supplier.

Why do companies implement supply chain finance?

companies implement SCF for far more reasons than just cash release.
 Working capital optimization
  Supplier liquidity needs
 Supplier relationship improvement
 Supply chain stability improvement
 Others
- Additional revenues, cost reduction
- Utilise cash surplus
- Optimize corporate finance (including asset financing)

Advantages of supply chain finance to different parties

Supplier:
Early Payment reduces financial dependence on the buyer
•Reduces cost of capital by leveraging the buyers credit rating
•Increases certainty of cash flows
•Provides pre-shipment; WIP financing
•Financial Discipline
Manufacturer/Corporate:
Minimizes investments in Working Capital
•Reduces Cost of Goods Sold(COGS)
•Reduces total borrowing cost
•Automation reduces administration cost
•Increases cash flow
• Increases stability of supply chain.
•Ensures availability of goods for end users
•Increases the sale
•Financial Discipline
Dealer/Distributor
Provides much needed working capital for purchase of inventory.
•Lower cost of funds then other working capital products
 •Increases sense of financial discipline due to short duration
•Automation reduces administration cost
Financiers
•Diversification of risk
•Quick asset building and fee revenue.
•Cross-sell opportunities •The process of evaluating the need of
money makes it simpler by defined movement of goods.
•Defined endues resulting into lower risk of diversion of funds.

Recent trends in supply chain finance

 Shift from documentary trade to open account and SCF
 Factoring and SCF are expected to grow at a decent rate
 Change in buying and selling activities by MNC clients-
centralized RTC/SSC setup
 Integrated treasury solutions that can meet client’s overall needs
 Regulatory and compliance considerations (e.g. Factoring act,
KYC, Big Data)
 Digitization of trade
 The emergence of non-bank funding/platform providers
 Cost of financing in emerging markets
 Liquidity and/or balance sheet constraints
 New solutions/risk mitigation techniques (Block chain, BPO,
multibank/syndicate deals)

2.2 WORKING CAPITAL POLICIES OF COMPANIES

Working capital policies of companies are usually classified as
aggressive, conservative or matching. The policy of working
capital mostly depends upon the risk taking ability of the
company and companies with high risk appetite opt for an
aggressive management of working capital. Such companies
usually collect their receivables on time and delay payments to
 suppliers as long as possible. This type of working capital policy
is mostly followed by companies looking for brisk growth. A
conservative policy on the other hand, aims at keeping current
assets and liabilities synchronised and do not deal with debtors
who have had history of default. The assets are kept slightly
higher than the liabilities for timely settlement of liabilities. The
matching or hybrid policy is one where the company matches
assets and liabilities and keeps minimum cash in hand.

2.3 MAJOR MARKET PLAYERS IN INDIA

The market is mostly fragmented between
 PSU Banks (SBI, Bank of Baroda etc.),
 Sector Banks (HDFC, Axis, IndusInd, and others)
 MNC Banks (Standard Chartered, HSBC etc.)
 NBFC’s (Tata Capital, Aditya Birla Finance, Hero FinCorp, etc.)
 FinTechs are the newest entrants (Vyana, Livfin, LendingKart,
Capital Float etc.)

2.4 SUPPLY CHAIN FINANCE

OFFERINGS SCF offerings

VENDOR FINANCE (Upstream Finance): Banks provide Bill/
Invoice discounting facilities to the
Channel/Partners(vendors/suppliers) of large companies for making
payments on behalf of corporate to the vendors, for the goods
supplied by them.
CHANNEL FINANCE (Downstream Finance): Bank/FI provides
Short-Term revolving loan facility to the Channel Partners/Dealers/
Distributors of large corporate for purchasing goods from the
company and selling it further to customers.
Instruments of Supply Chain Finance
Reverse Factoring- this financial instrument permits sellers to sell
their drafts relating to a specific buyer to a bank at a discount,
instantly after they are approved by buyer.
Inventory Finance- it allows seller to hold goods in a warehouse for
buyer till the time goods are not required.
Purchase order- this is basically an order that is available to the seller
based on a purchase order received from a buyer.

2.5 OPPORTUNITIES AND CHALLENGES

Opportunities
 E-commerce–In line with the current trend of Indian Economy
moving towards online sales from offline platforms, banks have
a huge opportunity to fund different supply chains through SCF.
It has already taken major share in Mobile, Electronics and
Apparel industries.
 Integrated Approach–Opportunity for banks to fund both
forward and back ward integration along the value chain. Some
of the banks have worked to their advantage in this space.
 Online Platforms/Automation-This can provide a big leverage in
terms of both integration and flow of information for the Banks
& other stakeholders.
 Potential Sectors-Focus on less tapped potential Industries i.e.,
Commodities, Electricals & Electronics, Consumer Durables,
FMCG& Agro based Industries to finance their Supply chain.
 Startups- Templated Innovative products for New Startups
 Focus on shorter periodic Assessments for flexible credit
decisioning
 P2P Lending- trends online market place for SMEs for invoice
Discounting through Bidding by different Financial Institutions.

Challenges
 Acceptability and awareness about the product among
stakeholders.
 Concentration on few selected industries only
 Lack of availability of a common platform for financers
 Biggest lenders still use Traditional sourcing and Assessment
Techniques
 Anchor requirement of pushing sales sometimes invariably
increase the risk in the system
 Diversion of funds for other purposes
 On-boarding and monitoring of dealers or suppliers due to
geographical spread.
 CHAPTER 3

SUPPLY CHAIN FINANCE FOR SMALL

BUSINESSES

3.1 NEED FOR SUPPLY CHAIN FINANCE

Sometimes businesses may have delayed payment from their buyers

or debtors. This blocks a fair amount of incoming cash-flow for a
period that can be used otherwise for taking up a new project. In such
situation, Supply Chain Finance becomes the need of the hour, where
other forms of short term credit may not be possible.
Hence the various benefits can be:
 Hassle-free and convenient paperless finance
 There is a convenient online platform for both suppliers and
buyers.
 Loan tenure of 30 to 60 days
 Ensures that working capital is managed efficiently.
 There are financing schemes for both dealers and vendors.
 Credit can be easily availed in 1-3 days.
 Quick online application process.
 No collateral required.
For example: Let’s say the buyer, Company ABC, purchases goods
from the seller, supplier XYZ. Under traditional circumstances,
supplier XYZ ships the goods, then submits an invoice to company
ABC, which approves the payment on standard credit terms of 30
days. But if supplier XYZ is in dire need of cash, it may request
immediate payment, at a discount, from Company ABC’s affiliated
financial institution. If this is granted that financial institution
issues payment to supplier XYZ and in turn, extends the payment
period for company ABC, for an additional further 30 days for a
total credit
 term of 60 days, rather than the 30 days mandated by the supplier
XYZ.

3.2 SCF INSTRUMENTS

3.3 TECHNOLOGY AS A SAVIOUR

Every business thrives on cash or the availability of cash in easy terms
whenever the firm needs it. Firms are constantly looking for ways to
access cash at reasonable term or postpone payment to creditors.
Suppliers on the other hand are looking at ways to reduce the cash
cycle and augment their working capital. This tension between the
buyer, who wants flexible payment terms and the suppliers who wants
a shorter cash cycle, creates the need for what is popularly known as
supply chain finance “management”. As physical supply chains have
become more and more optimised, firms find it harder to realize
savings by managing these. This has prompted supply chain managers
to focus their attention to the financial flows along the Supply Chain
(SC) which form an essential part of the continuum of the business
operation. Hence businesses today attempt to optimize the financial
flows along the supply chain, more popularly known as “Supply
Chain Finance” (SCF) management.
Credit crunch has become an essential feature post the global
economic crisis and not just corporates, even banks are eager to make
maximum use of their limited capital stretch. While on the one hand
firms have to think as supply chains rather than as insulated entities,
banks on the other hand are forced to extend their credit reach by
creating unconventional solutions that will help mitigate their lending
risk.
Some of the commonly known supply chains financing instruments
are bill discounting or warehouse receipt finance. In such cases, the
bank steps in and funds the working capital gap by charging a
discounting fee against firm orders which have been billed or against
warehouse receipts. Another common technique is called reverse
factoring in which the lender purchases accounts receivables only
from transparent, high-quality buyers. Sometimes, inventory which
has been shipped and is in transit is funded by the lender secured by
pledging the inventory. A simple trade credit, on the other hand is an
arrangement between the buyer and seller, wherein supplier offers
buyer early payment discount and charges interest on extended
payment terms.
The following table offers a glimpse of a few other prevalent
techniques:

While these traditional tools fix the working capital problem, these
are still largely unable to satisfy the demand for timely funding. Firms
that do not have access to bank funding use fixed assets such as
property as collateral for borrowing. External events such as the one
witnessed in India recently, namely the collapse of IL&FS; an
infrastructure finance company creates a crisis of confidence. Events
such as these almost instantly cause the borrowing costs to rise
hurting every firm equally.
However, large, publicly traded companies, respond to tough times by
shortening their own working capital cycle by lengthening it for their
suppliers, namely, the smaller firms. This hurts small firms
substantially because they have to borrow at higher cost from banks.
Even non-bank lenders, who are more flexible in lending to small
firms, require clarity in financial projections, documentation, current
and fixed assets to be able to decide quantum of working capital
requirements vis-a-vis long term loan requirements of the SME,
which many of them are unable to provide.

The more modern and unconventional tools for supply chain

financing uses technology interface to connect the bank and the
players in the supply chain. One such example is the Receivables
Exchange of India Ltd (RXIL) which was incorporated on February
25, 2016 as a joint venture between Small Industries Development
Bank of India (SIDBI)
– the apex financial institution for promotion and financing of
MSMEs in India and National Stock Exchange of India Limited
(NSE) – premier stock exchange in India. RXIL operates the Trade
Receivables Discounting System (TReDS) Platform as per the TReDS
guideline issued by Reserve Bank of India. It is an electronic platform
that allows auctioning of trade receivable. The process is also
commonly known as ‘bills discounting’, wherein, a financier
(typically a bank) buys a bill (trade receivable) from a seller of goods
before it is due or before the buyer credits the value of the bill. In
other words, a seller gets credit against a bill which is due to him at a
later date. The discount is the interest paid to the financier.

The process starts with seller uploading the invoice on the platform. It
then goes to buyer for acceptance. Once the buyer accepts, the invoice
is then factored and becomes factoring unit. The factoring unit then
goes for auction. The financiers then enter their discounting (finance)
rate. The seller or buyer, whoever is bearing the interest (financing)
cost, gets to accept the final bid. TReDS then settle the trade by
debiting the financier and paying the seller. The amount gets credited
the next working day into the seller’s designated bank account
through an electronic payment mode. The second leg of the settlement
is when the financier makes the repayment and the amount is repaid
to the
financier. As per RBI TReDS guidelines, only MSMEs can participate
as sellers, while banks, non-banking financial companies and
factoring companies are permitted as financiers.

These technologies enabled platforms give the opportunity for firms

to discover borrowing costs through a transparent process. SCF is new
emerging opportunity for banks and fintech companies. Traditionally
dominated by banks, the market has more recently been entered by
FinTechs: specialist financial technology companies that provide
platforms and software-based services to support SCF operations.
SCF is a big business, with $2 trillion in financeable highly secure
payables globally and a potential revenue pool of $20 billion as
estimated by Mckinsey.
Thus, SCF represents a win-win opportunity for all participants.

CHAPTER 4
FINDINGS, CONCLUSION AND RECOMMENDATIONS

4.1 FINDINGS: Are firms willing to try out the newer SCF
options?
I ran a detailed survey to understand various SCF tools implemented
by companies, through a questionnaire among companies and 16
companies responded to the questionnaire.
 i. Companies responded in the questionnaire act as seller or buyer or
both.
ii. 75% of the responding companies under the present study
responded to our survey as buyers taking this number to 12.
iii. Other 18.75% responded as both buyers and suppliers and one
organization filled the survey from supplier’s perspective.
iv. Industries such as automobile, fishing, electrical equipment,
pharmaceutical, IT, leather and the new age e-commerce have
been represented in this study.
v. The annual turnover of the responding companies ranged from 50
lakhs to 10 crores for the responding companies who participated
in the survey.
vi. As for the position of these responding companies in the market
respondent recognized themselves as a swiftly growing company.
vii. I had also asked companies to place themselves in their supply
chain. Some of the companies play multiple roles and they
responded accordingly.
viii. 13 respondents placed themselves as manufacturers and six as
service providers. Two responses were filled from perspective of a
distributor, one from supplier, one from contractor and three from
retailers’ perspective.
ix. Of the companies that responded to our survey, only two
companies had a SCF initiative that ran for last four years. Three
companies were new to SCF practices. The remaining companies
does not have SCF initiatives.
x. The most surprising results of the study came from the
perception of the challenges faced by organisations in
implementing SCF management solutions. Financial reasons
were listed well below the learning, training and technology
management problems. The biggest impeding factor for SCF
management has been perceived as lack of training in Supply
Chain Finance. Lack of automation, lack of information and
knowledge and lack of trained workforce have been identified as
significant reasons for not adopting technology driven SCF
solutions.
 Top ChaUenges faced by organizations in implementation of SCF
■ Total
lack of training in su pply chain finance
lack of automahon of invoicing and paymenL
7.76%
lack of knowledge & informati.on o:n, s,upply...
7.76%
Lack of IT ex perts to sillpport automation 6.9 %
Lack of abllity to access SCF at vartous stages in. 6.03 %
5.17%
Financially weak su pplier
5. 7%
Hig:h day sales outstand ing
(DSOJ - '5. 7 %
Slow processing of paym en,t transactiom --- ---
Lon ger transaction cycle in sovrcing AS%
Poor vlsibility into movem.int of goods .4 5%
Lack of coo rd ination}coUabor aition among...
AS%
longer tra r1saction cycle ln distr\bution

f
S%
Lack of appropriate ted molog,y for payment.. A5%
lack of fmanciing o.n acceptable ternns for irn-...
Laok of cash 11.ow managerne:ril
Lac:k of common vision among SC partner,s 2 .s r
2 . S
259% l!.72% 1.72%
Non,-e ffe ctive inven tory management techni.q
I.72%
ue.s Lack of collaborati:ve techno log ies to 1.72%
manage...
R.e dud ng the total cash low cyc-le time from...
lade of financing on accepta ble tem1s fo r work-
... Lack of coordination/collabo ration in
payment... Missing early payment d lscount
given by...
G.eog rapMca l challenges
iL.ack of working ca,pital/casn management tools
High diversity of business
lack oftrust among Supply Cha in pa rtn e.-s
Lack of app ropriate procedure for supp
lier...
lack of t ird party sourcing
Govemme,nt law.s &
mgulatto:ns
Culture
Prem 1re from top management to
lmprovekey-.. Unreliable and unpredictable
casn flows
MO% 2.00% 4.00% 6.00% S..00% 10.00% 12.00%
4.2 CONCLUSION AND RECOMMENDATION

The fact that small and medium enterprises (except one) did not
respond to the survey and the fact that even the larger businesses
have identified skill, automation, personnel and training as
significant impediments gives us some sense of how the SCF
management has evolved in India. Indian business has a long
road ahead in embracing technology driven SCF management
practices.
Half of all the companies that responded to our survey
maintained conservative working capital, implying that they
were not availing the best ways to manage working capital to
minimum. The rest were evenly divided between aggressive and
matching policy. Whereas, the companies that identified
themselves as growing, opted for aggressive working capital
management.

Globally today, solutions involving block chain technology are

being embraced for better management of supply chain.
For example- 4,500 farmers in Australia are connected to their
end customers, mainly supermarkets and restaurants’, using a
platform enabled by block chain and this is likely to result in
tracking food orders more easily and getting farmers paid more
quickly.
The block chain solution leverages block chain technology to
reduce the wait time for physical documents to be exchanged
between parties, which now can take anywhere from five to 10
days.
Implementing electronic transferral of documents means goods
can be shipped and payments received more quickly. The
platform also provides greater transparency for the end customer
as to where the end product is sourced.
While the block chain and smart contracts are revolutionising
SCF across the globe, our study on the set of companies
indicates
 that India still has a long way to go in implementing full-fledged
SCF tools by embracing technology driven solutions.

Although supply chain finance has now surpassed traditional

trade finance in market still we expect this trend to accelerate
over the next three to five years in India, driven by three waves:
deepening of established solutions targeted at suppliers, further
integration and sophistication of products for buyers, ultimately
the awareness among the buyers and suppliers.

CHAPTER 5

REFERENCES

1. McKinsey Report (2015)

2. Konstantine Kleemann Thesis on “Theory of Supply Chain
Finance: Its implementation and an Organization’s
Benefit”
3. https://tradefinanceanalytics.com
4. https://lendingkart.com
5. https://m.indusind.com
6. https://in.linkedin.com
7. https://www.bankofbaroda.in