Delayed Payments, Liquidity Crunches Holding SMEs Back - Supply Chain Finance Can Fix That

Poshn, a leading fintech platform, is transforming supply chain finance (SCF) for SMEs in India, particularly in agriculture, where liquidity is crucial. By integrating financing with procurement and sales, Poshn ensures seamless credit access, helping small businesses overcome cash flow constraints.

"Access to timely and affordable capital remains one of the biggest hurdles for SMEs," says Bhuvnesh Gupta, Co-Founder, Poshn. "SCF provides short-term credit linked to transactions, reducing dependency on delayed payments from large buyers."

To enhance efficiency, Poshn leverages AI-powered credit assessments and digital platforms that streamline procurement, invoicing, and financing. "Technology adoption is key," Gupta adds. "SMEs must embrace digital tools to optimize operations, improve traceability, and scale sustainably."

With targeted policy support and increased financial literacy, SMEs can unlock their full potential, driving India's economic growth. As Gupta puts it, "The future of Indian SMEs lies in a transparent, tech-driven supply chain ecosystem."

What role do you believe supply chain finance can play in enabling the growth of SMEs in India, and what are the key challenges that need to be addressed?

Supply chain finance (SCF) plays a pivotal role in enabling the growth of SMEs in India, particularly in sectors like agriculture, where liquidity is crucial for smooth operations. Access to timely and affordable capital remains one of the biggest hurdles for SMEs, despite various government incentives and schemes. Traditional financing avenues often involve lengthy processes, strict collateral requirements, and high-interest rates, making it difficult for small businesses to secure funds when they need them most. This leads to delayed procurement, production halts, and missed growth opportunities.

SCF offers a viable solution by providing short-term credit linked to supply chain transactions, enabling SMEs to maintain steady cash flows and reduce their dependency on delayed payments from large buyers. However, the ecosystem still faces challenges such as logistical inefficiencies, lack of digital infrastructure, and limited awareness among SMEs about these financing options. Many owners are hesitant to adopt new technologies, keeping control centralized and preventing effective delegation, which further restricts scalability.

What strategies or innovations can be employed to increase the efficiency of supply chain finance for SMEs in India, and what benefits can be expected?

To increase the efficiency of supply chain finance (SCF) for SMEs in India, technology adoption and innovative financial solutions are key. One effective strategy is leveraging digital platforms that integrate procurement, sales, invoicing, and financing, streamlining the entire process for SMEs. AI-powered credit assessments using alternative data sources such as GST filings, bank transactions, and purchase history can help provide faster, collateral-free credit access. Invoice discounting and factoring services can also be game changers, allowing SMEs to unlock working capital tied up in receivables without waiting for large buyers to make delayed payments. Additionally, blockchain technology can bring much-needed transparency and traceability to transactions, building trust and reducing disputes across the supply chain. Predictive analytics can further help SMEs with demand forecasting, pricing insights, and risk management, allowing for more strategic procurement and sales decisions.

The benefits of these innovations are significant. SMEs can expect improved cash flow, faster access to working capital, and reduced reliance on traditional, cumbersome loan processes. Efficient supply chain finance not only helps businesses meet their day-to-day operational needs but also allows them to scale sustainably.

How can financial institutions and fintech players improve their outreach and penetration among SMEs in India, particularly in rural and underserved areas?

Financial institutions and fintech players can significantly improve their outreach and penetration among SMEs in India, especially in rural and underserved areas, by focusing on accessibility, education, and tailored solutions. One key strategy is simplifying the onboarding and documentation processes through digital platforms that use alternative data like GST returns, transaction history, and utility payments for credit assessments. This reduces dependency on traditional collateral and speeds up loan approvals. Additionally, offering vernacular language support and mobile-friendly applications ensures that rural entrepreneurs can easily access and navigate these platforms.

Building strong local networks through partnerships with agri cooperatives, mandi associations, and local influencers can help increase trust and awareness about available financial services. Financial literacy programs and on-ground workshops can further educate SMEs about the benefits of supply chain finance, digital payments, and working capital solutions.

Fintech players are already bridging this gap by integrating financing directly into procurement and sales processes, offering embedded finance solutions that are easy to access and use. By providing tailored credit products that address the unique cash flow cycles of agri processors and millers, and ensuring fast, transparent disbursements, fintechs can empower SMEs in rural India to scale sustainably and participate more actively in formal economic channels.

What role do SMEs play in driving India's economic growth, and what policy initiatives or support mechanisms can be put in place to enable their growth and success?

SMEs are the backbone of India’s economy, contributing nearly 30 per cent to the country’s GDP and employing over 110 million people. They play a critical role in driving industrialization, fostering entrepreneurship, and promoting balanced regional development, especially in rural and semi-urban areas. In sectors like agriculture, manufacturing, and services, SMEs not only create employment but also drive innovation and export growth. Their agility and ability to adapt to market changes make them vital for India’s inclusive economic progress.

However, to unlock their full potential, targeted policy initiatives and support mechanisms are essential. Simplifying access to credit through collateral-free loans, expanding supply chain finance programs, and offering subsidized interest rates can address liquidity challenges. Digitization incentives, financial literacy programs, and technology adoption support will help SMEs scale efficiently and remain competitive. Strengthening infrastructure in rural areas, improving logistics, and streamlining regulatory compliance are also crucial.

What are your insights on the current state of SMEs in India, and how do you see them evolving in the next five years?

The current state of SMEs in India, particularly in the agri-processing and milling sector, reflects both immense potential and persistent challenges. Despite contributing nearly 30 per cent to India’s GDP and employing over 110 million people, these enterprises often struggle with limited access to formal credit. The biggest hurdle remains supply chain finance, where payment delays by large organizations and restricted working capital create liquidity crunches for processors and millers. Many SMEs also grapple with a lack of traceability and inefficiencies in moving agri-commodities through the value chain. Over the next five years, the evolution of these SMEs will hinge on resolving these structural issues.

At Poshn, we recognize supply chain finance as the cornerstone of sustainable SME growth in agriculture. Our platform is solving this by offering seamless credit access to processors and millers, enabling them to manage cash flows efficiently. By integrating supply chain financing with real-time traceability solutions, the platform ensures timely payments, reduces dependency on traditional financing, and builds trust within the supply chain. As SMEs adopt digital solutions like ours, we foresee a more transparent, liquid, and resilient ecosystem where small enterprises can scale without the constant fear of capital shortages or payment delays. Poshn is empowering India’s agri SMEs for the next leap.

How do you think technology can be leveraged to improve the efficiency and transparency of agri commodity supply chains in India?

Technology has the potential to radically transform the agri-commodity supply chains in India, especially for SMEs that are currently constrained by limited managerial bandwidth and traditional ways of working. Many of these businesses are run by just 2-3 key decision-makers, often the owners themselves, who prefer to control every aspect of operations. This lack of delegation, coupled with limited exposure to technology, hampers scalability and efficiency.

By adopting modern technology solutions—particularly AI-driven platforms—SMEs can automate routine tasks like procurement, quality checks, inventory management, and payment tracking. AI can help predict price trends, optimize sourcing decisions, and streamline logistics, allowing owners to make smarter, data-backed decisions without being involved in every minor detail. Technology also brings greater transparency across the supply chain, ensuring better traceability of commodities from farm to factory and building trust with buyers.

We’re witnessing how tech adoption can unlock new growth for agri processors and millers. Our digital tools simplify procurement and sales while offering supply chain financing, which frees up working capital. Over time, embracing technology won’t just be an option—it’ll be essential for SMEs to stay competitive, scale their operations, and create a more efficient, transparent agri ecosystem in India.