A better future

For more than a decade large, firms have offered supply chain finance (SCF) to their suppliers, yet uptake by SMEs has remained limited

Sneha Dvivedi[1] was elated – after years of barely surviving on small orders from local customers, she had finally made it. Half a year ago the purchaser of a large European retail chain had come to visit her small textile manufacturing business. She had put all her effort in that pitch and she had managed to win a large order. The purchaser had been really excited about the design and the quality of her products. 

The contract delivered the type of financial security Sneha had been dreaming of for years. No longer would she have to worry about being unable to support her children. No longer would she have to work endless nights worrying about when the next order would come in. This contract changed her life forever. 

Sneha had hired more staff, bought more materials, and worked day and night to fulfil the order. She used all of the company’s money and all of her savings for this growth; Sneha staked everything on it. And why wouldn’t she? She knew that she could deliver the goods and had the contract to guarantee a buyer. She even turned down business from local customers to ensure she could meet her order deadline; the customers who had loyally been keeping her afloat all these years. And she had made it: Today she had shipped the first container of trendy T-shirts and other fashion apparel to her customer. She would make similar shipments every month, and she knew that more orders would be coming once people overseas had seen first hand what she could produce. 

But Sneha’s success is still at risk: She has not yet received her payment. As Sneha works to complete the order for the next month, she hears that the delivery of her first shipment had been delayed. Her payment terms only start from the receipt of goods, so Sneha will have to wait longer than expected to be paid for her goods. 

This is terrible news: Sneha had budgeted for some delays but she does not have enough spare cash to cover the extra time. Her lenders, suppliers, rent, payroll, and other business expenses still need to be paid but she will run out of cash while waiting for the money. The business that she had worked so hard to build up over the past years is threatened, all of her workers could be left without income and she and her family could be ruined. All this personal and financial loss is a result of something as simple such as a delayed delivery and long payment terms. All her years of work gone because of something she could not possibly have any control over. 

Or could she? Imagine an alternative world: A world where Sneha can have her invoices paid instantly, as soon as they are received by her customers:

The money arrives in her account right after she shipped the goods. Instead of worrying, Sneha can focus on finding the right location for a larger production workshop, and on her business of making great, fashionable clothes that people love to wear. She can expand the business, and continue to grow her company. Instant payment of her invoices enables Sneha to show the world that her business can be a success, and allows her to achieve her true potential.

These two possible outcomes could not be more different, for the lives and future of Sneha, her workers, and all their families. While Sneha’s case is a fictional one, it is based on the reality faced by small business owners the world over. Every day people lose their livelihoods as a result of slow payments. Businesses run out of cash because they have no way of ensuring that they will get paid when they need to get paid; not through their own fault. Long payment terms mean that cash-strapped businesses are forced to finance their customers for no return, while struggling to meet their own bills.

There are 20 million SMEs selling goods and services to the world’s largest 5,000 companies. SMEs are key agents of innovation, job creation, social mobility and inclusion in any economy. SMEs account for 95% of firms and 60-70% of employment in the OECD and even more in developing countries. SMEs contribute the largest share to employment and jobs growth globally, and specifically in the low income countries. 

Previse is on a mission to change B2B payments. We are here to help the Snehas of this world and ensure that the good outcome becomes the standard. We do not accept that any business owner, small or large, anywhere in the world, should be denied the opportunity to grow to their full potential, just because they have to wait to get paid. We want to enable SMEs to drive growth, inclusion, innovation, and employment all over the world by ensuring that they can get paid instantly. We unleash the power of data to achieve this: a world where business data makes commerce efficient and fair for all. 

[1] Disclaimer: The story and the names are made up, but the problems are real and happen every day all over the world.

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