Small businesses play a huge role in communities, but they need help

Can supply chain financing be used as a tool to drive financial inclusion?

Iain Brougham
Jun 27, 2018 · 4 min read

Lack of credit and cash-based transactions are major pain points for small merchants

Tienda Pago uses supply chain financing to support small merchants in Mexico and Peru.

Time to scale up supply chain finance solutions for small merchants

Supply chain finance is not new — big banks have long offered it to large corporations to support cross-border trade, and informal mechanisms have existed for centuries. However, as markets evolve, the variety of available technologies capable of digitizing business operations today mean that now more than ever this type of financing can benefit small merchants.

Merchant-centric services can alleviate critical pain points for merchants and ecosystem

The lack of credit for small businesses has an impact on the merchant themselves, the local communities where they operate, and nationwide trade and fast moving consumer goods (FMCG) distributors, such as Unilever and Coca-Cola. For merchants, the lack of credit means their ability to restock is limited by the amount of cash they have on hand, which has been generated from previous sales. This lessens their efficiency and ability to scale. As a result, communities miss the chance to have the job growth and convenience that thriving local businesses bring. FMCG distributors have to deal with a lack of consistent demand and low visibility in a supply chain where they are trying to operate as efficiently as possible.

How can we help merchants buy better, sell better, and run better?

Enabling merchants to buy better, sell better, and run better through the use of technology is the first step to implementing a merchant-centric supply chain finance solution at scale. These solutions could include access to marketplaces for better pricing on purchases, the use of digital channels to drive customer engagement, and digital means of tracking and managing inventory, payables, and receivables to allow greater visibility of cash flows.

Ventures

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