How Covid-19 gave Nirav Choksi’s fintech a leg-up

CredAble, a supply chain financing fintech, has seen monthly disbursal jump from an average ₹100 crore to ₹1,000 crore through the Covid-19-induced lockdown.

CredAble—a leader in the supply chain financing space in India—has been in business since March 2017. However, the Covid-19 pandemic, and the subsequent lockdown, has proved to be a game changer for the fintech venture that offers holistic working capital solution to corporates. “CredAble has met its year-end targets within the first few months of the pandemic,” says Nirav Choksi, CredAble’s CEO & co-founder.

Until April this year, CredAble had been serving its clientele with an average monthly disbursals of ₹110 crore. However, Covid-19 has grown CredAble’s business manifold, with cumulative disbursals adding to ₹2,500 crore between April to September 2020.

Apparently, CredAble is currently disbursing working capital finance to both MSME vendors and dealers or retailers of large corporates in segments such as e-commerce, retail, manufacturing, and FMCG, in the range of ₹1,000 crore a month.

In an email interview with Fortune India, Choksi shared his views on the changes that the pandemic brought about for the business and the way forward. Edited excerpts:

Given over 9 times jump in monthly transaction values, how has the Covid-19 pandemic changed your business and your expected milestones as envisaged at the inception?

CredAble has met its year-end targets within the first few months of the pandemic. As a result, we have expanded our reach, re-aligned our goals and are now focussing on introducing new products into the market, while at the same time, vertically integrating into the existing value chains of our clients, offering them more flexibility and a better user experience. Business wise we have significantly accelerated our goals in terms of customer acquisition and growth in our platform volumes. We expect to cross ₹1,500 crore in monthly volumes by the first quarter of the coming year.

As the pandemic-induced lockdown brought mobility and even businesses at a standstill, how did you see the number of new clients increase since April 2020?

Since April, we have increased our ecosystem across the supply chain. We have used the time to sign on over 25 new large, blue-chip anchors. We are also in various stages of discussion with 150-plus other anchors and hope to convert a significant percentage of them.

How has the pandemic reduced your customer acquisition cost? Can you share the approximate number of clients added since April 2020?

Customer acquisition costs have drastically reduced with a shift in strategy from a vendor-up to an anchor-down approach. This, along with digitisation of several processes in the wake of the pandemic, has seen the number of vendors availing of financing exponentially increase by more than 30 times.

Could you provide some colour on the demography of your clients? Are they digital savvy, or have they been pushed primarily because digital was the only working block during the lockdown?

While our anchor clients are all large companies, which are rated ‘A’ and above, and are digitally savvy, our programs cater to their suppliers and distributors as well. These bases cover large savvy corporates as well as micro small and medium enterprises (MSMEs) proprietors, partnerships, and other small companies.

While around 35% of our customers’ vendor bases come from the short-tail, we are seeing a wide implementation of digital processes among MSMEs as well. Even before the pandemic, CredAble has maintained a team of relationship managers that engage with these clients, aiding them in the digital processes, and helping them with on-boarding and continued use of our platforms. CredAble’s technology platforms have been built keeping in mind the most non-savvy borrowers which is evidenced by over a thousand small and medium sized logistics and other companies using our platform.

Have you managed to rope in clientele outside the SAP universe?

While our recent selection in SAP’s Startup Studio cohort has certainly boosted our business development with SAP clients, CredAble’s platform is 100% enterprise resource planning (ERP) agnostic, with several clients using Oracle and other platforms as well. While on the financier side we have tied up with banks using Finacle and other software. In fact, we even recently integrated with a domestic bank that uses its own in-house core banking system.

For a client dealing with you, how is supply chain financing cost-effective? Is it fair to say that supply chain financing, as a line of business, has been lower on the priority for traditional lenders like banks and NBFCs?

A majority of the vendors who avail of our financing are MSME players that are not deemed credit-worthy by typical banks and NBFCs, and are left at the mercy of moneylenders. Our supply chain financing solutions are structured to leverage the end-anchor’s creditworthiness and provide financing to vendors at their own cost of capital. Vendors are more inclined towards our products because, unlike traditional banks and NBFCs, our programs are collateral-free and in many cases remain off-balance sheet for the borrower.

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