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Set Working Capital Free with Faster Supply Chain Financing

Working capital is a common pain point when delays in cash flow occur. In emerging markets, the fragmented supply chain created by sub-contracting and siloed paper-based record-keeping creates frequent cash flow delays.

Cash is delayed because payment is delayed. Payment is delayed because of ongoing credit extensions and disputes. According to Aamir Haroon, Middle East Managing Director at OpenPort, this results in suppliers and transporters in growing markets such as Pakistan relying on financial institutions for working capital – a scenario that extends to the distributor side where they must pledge their properties or stocks for financing.

OpenPort’s goal is to remove the delays created within the supply chain that prevent parties from accessing financing quickly and affordably. This is achieved by integrating all parties on a single platform to record and verify events and transactions. Delays exist due to lack of information. By providing all parties and financial institutions with real-time verified data of what is occurring in the supply chain, financing becomes immensely more accessible and lower risk.

This is achieved by connecting suppliers, transporters, distributors, retailers and financial providers on OpenPort’s enterprise transport management platform.

An irrefutable electronic Proof of Delivery (ePOD) plays a crucial role in facilitating this process. Today’s legacy systems can take 20 to 100 days to process deliveries depending on the flow of activities while invoices can take a day or more to validate. Periods of delays like these are detrimental to the supply chain’s cash flow especially considering that goods and products should be constantly moving from point A to B in order to create value – if there’s no movement, there is no value.

OpenPort solves this by using ePODs to make transactions faster. Validation is often the cause of disputes within systems which snowballs into bigger delays. A system using IoT, AI and blockchain allows stakeholders to agree on a set of rules which can then be digitally automated without the need for intermediaries.

In this system, relevant stakeholders can contractually agree on their liabilities for payment and cut down on unnecessary disputes and delays as processing is automatic. As an effect, transporters and suppliers can now discount their services and goods due to more flexible liquidity. This can also free manufacturers, suppliers, and distributors from collateral requirements for SME financing as there are no more delays or information shortfalls that create risks for investors like banks and financial institutions.

Executing this vision takes cooperation, with the outcome of more freedom to allocate capital towards growth and improvement across the entire supply chain.