Dealer Finance

Supply Chain Finance Companies in India: Best Solutions for MSME Growth

By Tata Capital
29 December 2025
8 mins read
3076

Micro, Small, and Medium Enterprises (MSMEs) contribute nearly 30% to India’s Gross Domestic Product and generate employment for approximately 100 million people in India. MSMEs lay a solid foundation for India’s economic development and are a significant source of innovation and progress. Access to adequate finance is critical for the survival and growth of MSMEs. However, financial institutions restrict their exposure to MSMEs because of the high cost of servicing and the risk of lending without sufficient collateral.

Supply chain financing (SCF) plays a crucial role in bridging the financial gap to revitalise MSMEs and provide much-needed liquidity. Through SCF, financiers like Tata Capital provide early payment solutions to MSME sellers by discounting their invoices while enabling buyers to optimise their working capital.

Here are some ways in which supply chain financing is bridging the financial gap for MSMEs in India:

Overview: Supply Chain Finance in India & Key Market Drivers

Supply Chain Finance (SCF) is changing the way businesses manage money and working capital by linking buyers, suppliers, and banks. It allows companies to access funds faster, improving cash flow and reducing delays in payments.

This is especially important for India’s Micro, Small, and Medium Enterprises (MSMEs), which make up over 95% of the country’s industrial units but often face difficulties in getting affordable credit. SCF helps bridge this gap, offering flexible financing options to keep businesses running smoothly.

Supply chain finance fintech in India is growing and being used more widely. Broader factors pushing SCF growth include rising digital adoption, stronger support from regulators and the government, and the need for faster payment cycles in trade. These drivers are helping supply chain finance fintech in India become a key tool for business liquidity.

Top Supply Chain Finance Companies & Digital Platforms in India (2026)

India’s supply chain finance ecosystem is being shaped by digital platforms that connect large buyers, small suppliers, and financial institutions. These supply chain finance companies in India are making working capital access faster, simpler, and more transparent.

Some leading options in 2026 include:

CashFlo

CashFlo focuses on automating accounts payable and enabling supply chain finance. This supply chain finance fintech in India helps large companies manage payments better while allowing suppliers to receive early payments. By connecting buyers, suppliers, and lenders, it improves cash flow across the supply chain.

CredAble

CredAble offers technology-driven working capital solutions for businesses of all sizes. Its platform supports multiple financing products that help companies manage liquidity efficiently. CredAble aims to simplify trade finance using data and digital tools.

FinAGG

FinAGG works closely with distributors, retailers, and MSMEs. Its platform is trusted by large corporates and focuses on financing small businesses that form the backbone of India’s supply network. It helps improve credit access at the last mile.

Vayana Network

Vayana connects corporates and their supply chains directly with banks. It enables easy access to trade finance for both payables and receivables. This supply chain finance company in India also supports compliance needs like e-way bills.

Veefin

Veefin provides end-to-end supply chain finance technology, designed by banking professionals. Its solutions support onboarding, loan processing, and management, and power SCF programs across public sector banks.

Types of Supply Chain Finance Solutions: Invoice Discounting, Factoring, Reverse Factoring & More

Supply chain finance in India includes different funding options that help you improve cash flow and manage payments better across the supply chain. These include:

Reverse Factoring

In this model, a bank or financier pays the supplier early based on the buyer’s approval. The buyer repays the financier later, usually with longer payment terms.

Dynamic Discounting

Buyers choose to pay suppliers before the due date in return for a small discount. Suppliers get quick cash, while buyers save money on their purchases.

Approved Payables Finance (APF)

Here, a financial institution provides funds to the buyer, who then uses this money to pay suppliers on time. It helps buyers manage working capital efficiently.

Inventory Financing

Businesses use their stored goods as security to get financing. This allows them to unlock money tied up in inventory for daily operations or growth.

Receivables Purchase (Invoice Discounting or Factoring)

Companies sell unpaid invoices to a lender at a discount. This gives immediate cash, while the lender later collects payment from customers.

How Do Indian SCF Platforms Work? Step-by-Step Process for MSMEs

Supply Chain Finance (SCF) helps MSMEs get paid faster without putting pressure on buyers. It works by allowing suppliers to receive early payment on approved invoices, while buyers get more time to pay. Here’s the complete step-by-step process:

Step 1: Buyer Joins an SCF Platform

A large buyer signs up with an SCF provider, such as a bank or fintech platform.

Step 2: Suppliers are Onboarded

MSME suppliers are invited to register on the platform and link their invoices digitally.

Step 3: Goods or Services are Delivered

The supplier completes the work and raises an invoice for the buyer.

Step 4: Invoice is Approved by the Buyer

The buyer checks and confirms the invoice amount and payment date.

Step 5: Supplier Opts for Early Payment

The supplier can choose to wait or request early payment through the platform.

Step 6: Financier Releases Funds

A bank or lender pays the supplier upfront, usually at a small discount.

Step 7: Buyer Repays the Lender Later

The buyer settles the amount with the lender on the agreed-upon due date.

Timely access to capital

Supply chain financing provides early payment solutions to MSMEs and immediately fulfils the demand for working capital. With the onset of technologies and ERP integration, once the SCF line is set up, the fund requirement is fulfilled within a few hours. MSMEs can utilise this money to maintain inventory levels, procure new raw materials, or expand their business operations.

Access to affordable means of finance on demand is crucial for MSMEs to conduct uninterrupted business operations.

Recurrent source of liquidity

The government of India has launched a large number of MSME credit schemes, but they are one-time and non-recurrent access to liquidity. However, to meet daily expenses, MSMEs need to maintain a consistent flow of working capital.

Supply chain financing is based on monthly invoices, and it provides MSMEs with an opportunity to have sufficient cash to meet the working capital needs of the businesses periodically.

No burden of repayment

There is a significant difference in loan payment terms under credit guarantee schemes and supply chain financing. Under credit schemes, the rate of interest is lower. But borrowers need to repay the amount due within the stipulated timeframe.

However, it is not the same under supply chain financing. MSMEs have no repayment burden since it’s an advance against invoices due to MSME sellers. Financiers settle the payments by collecting directly from the buyers on the due date.

Cost-effective source of funds

SCF is an attractive option for MSME sellers as it can access low-cost financing. Lending institutions extend funds based on the buyer’s creditworthiness, supply chain relationship, and the vintage association between the buyer and seller.

It is a competitive source of finance compared to traditional forms of financing that promote better collaboration between the buyer and the seller. Buyers with a decent credit rating can negotiate better terms from the seller. In return, it accelerates MSMEs cash flows and strengthens sellers to contribute better in growing the buyer’s business.

Benefits for MSMEs: Why Work with Leading SCF Companies?

Supply Chain Finance in India offers several advantages that help MSMEs manage daily operations and grow steadily.

Better cash flow

MSMEs can receive payments faster instead of waiting for long credit periods. This helps them pay salaries, suppliers, and other business expenses on time.

Lower borrowing costs

SCF allows MSMEs to benefit from the strong credit profile of large buyers. This usually means lower interest rates than regular business loans.

Reduced payment risk

Since payments are backed by approved invoices and trusted buyers, the risk of delayed or missed payments is much lower.

Stronger business credibility

Being part of a formal SCF program improves trust with banks, investors, and new business partners.

Simple digital access

Leading SCF platforms offer easy online onboarding and faster approvals, saving time and effort for small businesses.

SCF brings about financial inclusion

SCF has existed for decades, but access to real-time data like bank statements, GST, and e-invoices has streamlined the end-to-end process with digital integration and technological advancements. Digitisation has improved the efficiency of the entire process and reduced the cost of supply chain finance in India.

With supply chain financing, MSMEs have easy access to finance at a lower cost, reducing their dependence on informal funding sources. It is a straightforward process with minimal documentation and allows borrowers to get funding at better terms from formal financial institutions.

Supply chain financing is an efficient financing alternative to meet the working capital needs of MSMEs. By offering easy access to credit, it accelerates the growth and development of MSMEs.

Tata Capital Corporate offers several small businesses quick access to capital through its supply chain financing solutions with tie-ups across leading corporate houses in India. Click here to know more about our supply chain financing offerings.

FAQs

What is the meaning of supply chain financing?

Supply chain financing is an arrangement where a buyer collaborates with a financial institution to pay suppliers on their behalf. While suppliers may need to join the program, the buyer is responsible for setting up the process.

Who should finance the supply chain?

In supply chain finance, the buyer takes the lead by involving a financier. The financier pays the supplier immediately, and the buyer repays the financier at a later date.

What are the top 10 supply chain finance companies in India?

The leading supply chain finance companies in India include KredX, TReDS, Drip Capital, M1xchange, Vayana Network, RXIL, Indifi, Capital Float, Invoice Bazaar, and CashInvoice. These firms offer solutions to enhance liquidity and streamline supply chain operations.

What is the difference between supply chain financing and inventory financing?

Supply chain financing focuses on strengthening supplier relationships and ensuring supplier cash flow, while inventory financing is specifically designed to fund the purchase and management of inventory. Businesses may use either or both depending on their requirements.

What is an example of supply chain financing?

An example of supply chain financing is when a retailer partners with a bank to pay its suppliers early, allowing the suppliers to receive their payments without waiting for the retailer’s payment terms to complete. The retailer then repays the bank later.

Who are the top supply chain finance companies and fintech platforms in India right now?

Leading SCF companies in India include CashFlo, CredAble, FinAGG, Vayana Network, Veefin, and TReDS platforms supported by banks and NBFCs.

What specific SCF solutions do these companies provide for MSMEs?

They offer invoice discounting, reverse factoring, approved payables finance, inventory financing, and digital working capital solutions for faster payments.

How does supply chain finance differ from a typical business loan for MSMEs?

SCF is based on approved invoices and buyer credibility, while business loans depend on MSME credit history, collateral, and longer approval processes.

Do TReDS platforms help MSMEs access affordable supply chain finance in India?

TReDS platforms allow MSMEs to discount invoices online with multiple lenders, ensuring transparent pricing, quicker funding, and lower interest rates.

What new technologies are leading the evolution of SCF in India?

Technologies like digital platforms, data analytics, API integrations, automation, and AI-based credit assessment are making SCF faster, safer, and more scalable.

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