Access to working capital remains a critical pain point for small- to medium-sized businesses (SMBs).
Unlike larger companies who commonly enjoy longstanding relationships with their preferred financial institutions, SMBs often need additional help accessing sources of capital. These cash flow concerns can lead to SMBs needing more time to pay their suppliers, further impacting their creditworthiness and ability to draw on traditional lines of capital.
PYMNTS recently sat down with Pushkar Mukewar, CEO and co-founder of digital trade finance company Drip Capital, to discuss how his organization’s newest partnership with Vayana TradeXchange (VTX) is empowering small- and medium-sized export businesses (SMEs) by offering a one-stop solution for critical growth and financing needs.
“Most of these SMEs, the biggest challenge to their growth is really credit access,” Mukewar said. “It’s a pretty large segment of the market which remains somewhat underserved or traditionally overlooked by banks — they’ve never been a main focus for traditional finance.”
Digital-First Financing Steps Up
Research in the PYMNTS report “Digital Banking Rises To Meet SMB Needs” similarly reveals that 75% of SMBs with working capital needs are the most likely to use a digital-only bank as their primary financial institute.
“Our focus is to offer a fully digital experience throughout the customer lifecycle, there’s a lot of focus on automation and leveraging technology at the backend of these transactions, to process and underwrite them,” Mukewar told PYMNTS.
As smaller businesses scramble for new sources of working capital from non-traditional sources, Mukewar said strategic partnerships like the one between Drip Capital and VTX are key not just to supporting his own company’s growth, but for positioning other businesses to succeed.
“Businesses are getting stretched for cash flow, so they need capital,” Mukewar told PYMNTS. “But I also see a negative impact where volumes are being impacted and businesses are not growing as much.”
Drip Capital’s post-shipment export financing solutions bridge the working capital gap among small businesses by using technology to provide easy and quick funds, enabling its client businesses to invest in their own growth rather than wait on B2B receivable payments to clear.
“Our strategic partnerships are generally within that focus area of how can we make credit access easier,” Mukewar said. “And VTX is trying to solve that exact same problem of access to efficient and quick financing for small businesses. And for Drip itself, for our business, we’ve seen that these partnerships offer a really great low-cost acquisition channel, and actually serve as a very important component helping us scale the platform.”
Within these mutually beneficial relationships, Mukewar pointed to platform integration as being key to success – adding that the data sharing element is “super helpful.”
Offering the End Customer a Seamless Experience
As macro headwinds buffet businesses around the world, the last thing SMBs want or need is a digital banking or financing solution full of speed bumps and integration frictions.
“We’ve realized, going through this process, that there are multiple pain points our customers have when it comes to just managing their business cash flow better. Financing is definitely one challenge, but there’s also other areas like foreign exchange, or how they handle insurance, right?” Mukewar said.
He said that he sees a number of opportunities for Drip to strategically activate pre-existing relationships with the many customers on its platform in order to, in his words, “become a one-stop shop for their trade needs.”
As PYMNTS has reported, the ongoing modernization of global B2B commerce is taking cues from the consumer payment experience by embracing digital and automated solutions to consolidate processes and remove manual labor speedbumps.
Emergent, all-in-one digital platforms hold great promise for smoothing B2B processes.
“Working capital is one product we offer,” Mukewar said. “Are there other kinds of financial and non-financial products we can offer to make the life of these SME customers easier?”
He added that providing Drip Capital customers with content research around how they can manage their businesses better, as well as providing real-time sector intelligence, has been very well received.
“If you provide [these customers] with tools and content beyond just access to capital, it’s very valuable as everyone looks to navigate the next 12 months, which are somewhat uncertain,” Mukewar noted.
As for what he sees taking place over 2023? A greater focus on cash flow, margins, and profitability.
“Business continuity and businesses’ sustainability in the light of an uncertain global macro is the main priority and focus for a lot of our customer base,” Mukewar said.
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