How do you see the amalgamation of fintech and manufacturing industry and how has this industry’s adoption of fintech solutions evolved over the last one-year?
As a platform-agnostic industry, FinTech has been a critical enabler for innovation in the manufacturing industry. By leveraging new technologies for transforming core business operations in AR and AP such as collections, payments, accounting, reconciliation etc., FinTech players are enabling the traditional industry to eliminate impediments, such as delayed accounts receivables and payables, which lock up working capital and hinder business growth.
During the last year, the urgent need for digital ‘access from anywhere’ accelerated the manufacturing industry’s adoption of the FinTech ecosystem. The need for both MSME and large manufacturers to remotely manage the supply chain and cash flows led to a massive shift away from manual processes towards automation of Accounts Receivable and Payable functions. During this time, our platform saw transaction volumes surge drastically from Rs.50-billion before COVID-19 to Rs.100-billion during COVID-19, with the number of dealer distributors increasing 4-times.
What kind of solutions are you offering for the manufacturing sector?
We have designed innovative automaton solutions for integrated Account Receivables (AR) and Account Payables (AP) management. On the Account Receivables side, we offer FreePay, an Electronic Invoicing Presentment and Payment (EIPP) platform, with straight-through reconciliation to ERPs. Through FreePay, we are delivering actionable invoices to buyers in real-time on mobile or desktop with integrated payment ability, which enables payment in time and accelerates collections. Further, it reduces DSO, disputes/billing adjustments, and reconciliation errors.
We also offer AlgoriQ, an AI-powered intelligent fund application (IFA) solution, for end-to-end AR/AP reconciliation. AlgoriQ auto-reads payment advices and bank receipt reports (MT940 etc.) in various formats and does multi-point data match of invoices for straight-through reconciliation in customer ERPs. The product also brings in sophisticated deduction management with aggregation, limit checks, and dispute resolution to minimize unauthorized deductions.
Finally, FinEX, our financing platform for AR and AP, extends working capital finance for both the distributors and the vendors from a variety of lending partners. In addition, our dynamic discounting platform assists corporates to improve EBDITA by offering discounted early payments to their vendors.
What are the key pain points highlighted by your customers in the manufacturing space? How are you combating these challenges?
A common pain point expressed by most enterprises in the manufacturing industry is the delayed collections and vendor payments, reconciliation of accounts receivables and payables etc., which are currently managed through traditional and manual solutions. However, as the scale of transaction volumes surges, companies that have a vast network of local dealers /distributors, as well as vendors across the country, are realizing the need for accuracy, speed and automation. Manual solutions take a longer time, possess higher error rates and add to the organization’s operational risk. An inefficiency will impact working capital requirements and optimization.
On the AR side, our FreePay solution speeds up collection by digitizing invoice presentment for dealers, processing payments and automating their reconciliation into ERP. FreePay allows immediate resolution of discrepancies and disputes and the application of instant credit notes. The platform also offers a real-time view of invoice status, including outstanding, ageing, payment status, credit notes, statements, etc. via mobile apps (android, iOS) and the web.
This automation and real-time view have helped manufacturers and their dealers/distributors reduce their DSO by half and unlock millions of dollars in working capital through quicker cash conversion. We also offer comprehensive analytical dashboards with audit trails, which allow real-time computation and trend analysis on all key AR metrics such as DSOs, unapplied cash receipts, cash forecasting, etc.
On the AP side, we automate invoice aggregation and ingestion, PO match and validation, automated workflows for approvals, dispute resolution etc. all the way to pay out. PayEX also handles payments to vendors through partner banks including Vendor financing from Lenders, EBDITA accretive dynamic discounting, factoring etc. Our vendor portals provide a real-time view of invoice and payment status to vendors besides acting as a front-end to accept discounting and loan offers. In effect, this results in a transparent ecosystem improving vendors satisfaction and loyalty.
Increasingly, manufacturers are facing internal mandates to reduce costs and drive greater efficiencies, how is Global PayEX enabling manufacturers optimize to the next level?
Even before the pandemic, we identified that manufacturers need to invest in AR and AP automation to increase their working capital efficiency. While this reduces manual efforts and helps improve the employees’ productivity, it also goes a long way in building a more agile and future-proof operation. Further, as the economy recovers and manufacturers experience an uptick in production, we enable them to embed technology at the heart of their business operations, which will help them reduce costs and prepare for the next growth stage. That way, not only will any business be ready for the next unforeseen challenge, but it will also be in a position to manoeuvre through disruptions and scale efficiently and profitably.
In the aftermath of the pandemic, there is a paradigm shift in digital services consumption and customer behaviours. Our customers have realized that our modern AR/AP solutions are not only helping them meet their partners’ expectations but also establish a direct digital connection with every dealer and supplier in their ecosystem. In turn, each partner can see the real-time status of the AR/AP operations significantly reducing the need for constant follow-ups. AR/AP teams can now focus on other vital areas of operations and further compound business gains.
How can enterprises impacted by COVID-19 leverage fintech solutions?
While lack of credit is a key void that Fintech solutions are filling, it is not the only one. Apart from providing distributor and vendor financing solutions, FinTech’s like Global PayEX are helping enterprises automate and optimize their entire working capital cycle with solutions on both the AR and AP sides. Due to the remote working environment caused by the pandemic, using digital solutions in every aspect of operations is increasingly important for enterprises. Be it presenting invoices to the customers, follow up by the sales team for invoice payment, vendor management or reconciliation of invoices, the challenges related to all such processes have been addressed by FinTech solutions like those from Global PayEX.
Manufacturers can also leverage invoice discounting to improve their cash flows. This method of converting invoices into assets has proven to be a successful and lucrative model for manufacturers, both large and small. Further, specific to supply chains, FinTech’s can help manufacturing companies and their partners to better manage financial operations, allowing buyers to complete payments faster and suppliers to receive funds faster.