In today’s highly dynamic business landscape, small and medium enterprises (SMEs) face various operational challenges, which include restricted cash flow or crunched capital. However, there is an innovative financial solution known as supply chain finance which has emerged as a savior for SMEs, providing them with the necessary liquidity and flexibility to grow and thrive.

The co-lending model has emerged as one of the most promising financial strategies in the Indian lending landscape, which brings banks and non-banking financial companies (NBFCs) together to cater to the diverse credit needs of borrowers. This collaborative approach brings synergy and agility to the lending sector and enables financial institutions to overcome individual limitations and unlock the potential of lending in India. Co-lending fosters synergy and agility by combining the strengths of banks and NBFCs, to further augment collaboration, inclusivity for a diverse range of borrowers, adaptability and operational efficiency.

Small and medium-sized businesses, especially those in the B2B space, need constant money for their operations. They reinvest this money into their businesses for growth, operations and expansion purposes. Thus, small and medium-sized businesses consistently need a steady supply of cash flow to keep the business running. However, more often than not, small businesses receive payment from their customers only on or just before the invoice due dates. The due date can be anywhere between 30 and 90 days from the date of issue of invoices. A business with a 30-day payment cycle will get its money only by the 30th day of issuing its invoice.

The B2B Buy Now Pay Later (BNPL) market has grown phenomenally in the last two years, especially since the time of the pandemic. With more and more people opting to shop online, and with digital payment options increasing steadily, BNPL became one of the most sought-after payment mechanisms. The BNPL payment method is expected to grow to about 9% in 2024, while it was only 3% in 2020.

All companies, even the large ones, time to time need financial backing and they turn to various lending platforms to get funds for their operations, expansions and more. It may not be possible for these companies to approach traditional financial institutions like banks, every time they need a loan. This is because they may not have the necessary collateral proceed with this process, or they may already have existing debt which makes it difficult to avail of further loan. Also, new companies may not have a strong credit history. This also makes it challenging for them to get bank loans. This is where vendor finance comes into play. Vendor finance is a good option for all companies, especially the large ones, that are looking for quick, short-term financing arrangements.

Business to business financing is simply the finances available to the companies that work primarily with other companies. Traditionally banks dominated such finances, but recent rise in fintech sector, have made finances more accessible in the b2b market, these fintechs have made the process involved much simpler and any b2b business can take advantage.