We depend on stable supply chains and healthy distribution networks. However, the thousands of SMEs who make up these networks need more support.
It may seem obvious, but I wonder how many corporates are really looking at how they support the suppliers and distributors they depend on? Granted, government support still exists and the Chancellor recently announced additional grants to get businesses back to work when restrictions ease. But many are saying this won't be enough.
Case study - Drinks manufacturer and wholesaler
A forward looking corporate is taking matters into its own hands. It already provides a credit facility to enable the thousands of pubs and restaurants it works with to purchase stock. But it's going a step further now: Providing a financial support 'hub' for these critical distributors to access other critical business products like loans and insurance. By doing this, they taking control to not only reduce risk in their supply and distribution chains, but also gain loyalty and competitive advantage.
Reducing the dependency on traditional lenders
Amazon and Goldman Sachs grabbed the (financial) headlines last year when they announced a partnership to provide sellers on Amazon access to up to $1m in funding - effectively bypassing the dependency on banks.
1) Amazon adds a new source of revenue with the fees from the Marcus credit lines, and
2) Amazon sellers get needed capital to continue selling on the platform." Ron Shevlin
Open Banking and embedded finance creates new opportunities
Making this happen is easier than it seems, thanks to modern fintech platforms. To access funding, corporates can either leverage their own balance sheet or access other capital providers. The next challenge to address is the question of 'risk' and how you price the credit you provide. Well, this is where distribution managers and supply chain managers are in the driving seat: They (should) have an un-rivalled view of individual company performance and a significant control over the distributor or supplier's ability to repay the loan. With the right set-up, It can be a virtuous cycle:
- The distributor borrows money and shares data with their wholesale supplier about demand and sales
- The more transparency that is available through banking data and EPOS data, the lower the uncertainty (or risk)
- In return for this transparency, the risk is reduced and the benefits can be passed on to the SME
Who is doing this?
A fintech platform making this happen is Certua. In their words,
"We provide an integrated credit risk insights platform that taps into our network of partners to match SMEs with a working capital need with lenders who wish to deploy capital. We automate data gathering and risk assessment, and provide the means to create custom decision making models and scorecards hosted within our platform.
To find out more, please contact us at firstname.lastname@example.org
Brisk is a technology platform that enables businesses to reduce risk and target support to assure supplies and maximise sales. We help you monitor businesses in real-time and enable these SMEs to access tools and financial services to help with cashflow, save money and reduce risk.