How does C2FO work as a financial technology/service?
C2FO is the first and largest working capital marketplace in the world and is working to deliver a future where every company has the capital it needs to grow.
Financial tools on the C2FO platform provide better, faster, and more flexible financing solutions, enabling enterprises (of all sizes) to manage their working capital needs. Our ability to create a seamless match between Accounts Receivable (A/R) and Accounts Payable (A/P) has enabled efficiency in cash flow between trading partners. While suppliers can take control of their cash flow, companies can increase EBITDA and gross margin and earn a better return on short-term cash, which improves the financial health of their supply chains.
C2FO’s strategy is clear: eliminate or greatly reduce credit risk and make capital available on tap. Our tactics are equally simple and clear: match accounts payable and accounts receivable from the world’s companies on a platform that is fast, affordable and easy for all to access.
How can C2FO as a financial technology/service help provide liquidity to pharma companies in particular, as they have to scale up rapidly to meet COVID-19 driven demand while being hamstrung by price caps and other regulatory issues?
In India, C2FO works with more than 100 leading corporates, including some of India’s top pharma companies. These corporates are using the C2FO platform to improve their own and their vendor partners’ access to liquidity. At the same time, C2FO solutions bring efficiencies in a company’s treasury and payment processes to drive cost optimisation and improved operating margins.
In recent times, the rise in demand has put pressure on pharma companies’ faster turn-around of raw material, increasing their need for more capital. C2FO offers a single front-end technology platform backed by balance sheet-friendly financing options like accelerating cash flow (from global pharma buyers) and financing from C2FO’s multiple funding partners. The programme does not require KYC or other documentation while it addresses the cash flow needs of the pharma company and their diversified vendor base in India and across the globe!
Given the rapid scale that the pharma companies are trying to achieve, capital requirement remains a critical aspect. C2FO has brought in a combination of Dynamic Discounting (DD) and Dynamic Supplier Finance (DSF) to enable these companies to support their own or their suppliers’ need for affordable capital.
What have been the major challenges and learnings while adopting C2FO in the sector in India?
The Indian pharma sector is expected to grow to $100 billion by 2025 and there is an immense opportunity to leverage on its low-price, high-volume factor. The high growth of the Indian pharma industry requires companies to adopt financing strategies that will support the dynamic financing needs of their supply chains. While traditional financing channels like banks provide some liquidity support to the pharma supply chains, they are usually limited by their credit appetite and regulatory requirements of KYC and documentations. A high growth industry like pharma requires newer technologies like C2FO to scale their financing strategy rapidly.
What have been the savings after implementing C2FO? Any success stories?
C2FO is one platform providing many working capital solutions. We work in synergy with the multiple departments within the company to help them achieve their business objectives. It strengthens the company’s finances and complements several ongoing initiatives in the areas like process improvements, supply chain health and working capital management. The solutions of C2FO are easy to implement with a secure file exchange that requires minimal ongoing support. It helps gain more control over the capital by providing the flexibility to either invest or preserve short-term cash. Every company can take control of its financing strategy without being overly dependent on external and often high-cost options like bank and credit insurance.
There are multiple success stories across pharma and several other industries. This is reflected by the frequent awards and recognitions won by many C2FO customers at regional/ global levels. For e.g.: CIPLA’s team won the Asia Pacific Award for ‘Best Treasury & Finance Strategy’ at a leading trade finance awards platform recently.
What could be the possible pitfalls of using this technology, on the data security and confidentiality side as well as other issues? And how can these be prevented?
As the world’s largest non-bank provider of working capital, working with Fortune 500 companies serving over one million businesses in more than 180 countries, C2FO takes data security and confidentiality extremely seriously. Globally, over 50 million invoices are uploaded daily and the C2FO platform has funded over $110 billion in working capital to date.
C2FO facilitates the price discovery for early payment on a highly secure platform which is compliant to international gold standards in data security (SOC 2 Compliant). All file exchanges for the system operations are encrypted. Companies’ accounts payable systems still make all the payments directly to suppliers. The programme is totally automated and each programme is customised to match the client’s financial workflow and control architecture.
How does the company see its future in India and specifically the pharma sector?
C2FO plans to develop newer markets including India, where it started operations five years ago. We are expanding business in India, as we continue to hire team members, build our product line and invest in future growth opportunities. While there are more than 150,0000 businesses in India on the C2FO platform, we want to provide easy access to affordable capital for many more businesses through our network. We are very passionate about driving capital access to the very far end of the supply chains thus supporting the financial well-being of many small and medium businesses – which are India’s backbone in many respects.
India’s pharma market is the third-largest in the world in terms of volume, and it is the 13th largest in value. India is moving towards reducing dependency on the import of Active Pharmaceutical Ingredients (APIs) and drug intermediates. Owing to this rebalancing of where drugs are made, the Indian pharma industry is expected to register a growth of 14.2 per cent in the second quarter, as per a study by Information and Credit Rating Agency (ICRA). This growth is expected to induce immediate liquidity requirements for both the pharma companies and their suppliers. While traditional financing providers are still waking up to this challenge, we have already created a digital-funding-network that will highly support the next phase of super-growth of the Indian pharma industry.
How many clients so far? What’s the target accounts receivable and accounts payable globally and in India for this FY?
The Indian market currently accounts for a sizeable portion of C2FO’s total global business. Almost 50 per cent of the total client base and 33 per cent of the total employees are based in India. With our growth initiatives and continued product innovation, we expect to grow rapidly in the coming years. Our strategy continues to provide the most convenient and affordable source of capital in India. C2FO has enabled working capital flows of more than $110 billion through its digital network and works with more than 200 leading companies, including 25 of the Global Fortune 100.