This announcement is posted in Express Computer and advises of a new capability from the Indian-based mature fintech named PayMate, which provides online payments services in multiple countries. In this case the platform has been enhanced to allow for automated dynamic discounting, which is sometimes mixed in with supply chain financing but is really just a form of optimizing the trade credit terms already provided by suppliers. We covered all types of trade finance in a detailed member report, and update new developments each year.
‘PayMate, a company in B2B payments, today announced that its full stack payments automation platform has enabled its entire ecosystem that consists of over 58,000 buyers i.e., large enterprises and their supplier network with Invoice Discounting Marketplace. The marketplace has been built to ensure both parties get paid before the due date thereby ensuring there is liquidity in the supply chain ecosystem. PayMate’s Invoice Discounting can be used in two distinct ways on its cloud-based platform:
-Buyer-Funded Model: All buyers using the PayMate platform have an option to earn higher returns on their idle surplus funds. This can be done when they seek discounts on select invoices from their suppliers, towards which early payments are made….
-NBFC-Funded Model: Alternatively, suppliers can also secure working capital through the PayMate platform via our NBFC partners. To secure funds in this manner, the PayMate platform creates a list of filtered suppliers after monitoring and analysing their payments data and patterns using the platform’s proprietary algorithms.’
Payments can be made with commercial cards from Visa, which of course begs the question as to the effect on the discount rate, but we have not been briefed so can only speculate. The pandemic has created (or renewed) great interest in working capital optimization, the importance of which we have been explaining to members for years, most recently in another member report. So in effect with a dynamic discounting marketplace, buyers can manage DPO and sellers their DSO, in simultaneous fashion. There is also a mention of procure-to-pay enhancements but no detail given.
‘Speaking on this enablement, Ajay Adiseshann, Founder & CEO, PayMate says, “According to an Atradius survey’20, there is a significant increase in late payments with an average of 66% of the total value of B2B invoices overdue. These are usually left unsettled by up to 150 days. This puts the suppliers (SMBs) across supply chains in a precarious situation where they find it tough to sustain themselves. In a bid to ease this burden, we’ve built a one-of-a-kind Invoice Discounting Marketplace that will ensure early payments being made thus maintaining goodwill and satisfaction among buyers and their supplier network. Our Invoice Discounting feature is fully automated making our B2B payments platform robust and perfect for all those businesses who have a large supplier network affected by the pandemic losses.” ‘
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group