The Double Whammy: Escalating Expenses and Shrinking Revenue

Reversing the impact with InvoiceNxt

The recent interest rate hike has raised concerns among businesses worldwide, especially for small and medium-sized enterprises (SMEs) in emerging markets.

Higher interest rates lead to higher costs for capital, which means that SMEs will have to pay more for borrowing money. As SMEs in emerging markets already have limited access to capital, higher interest rates will impact their ability to invest in their businesses even further, which can lead to a decline in production capacity and a decrease in sales.

Furthermore, the exceptionally high and ongoing inflation drives labour costs and costs for goods. Everyone’s cash needs are increased. Companies with limited balance sheets are hit extremely hard. On the other side, the same factors reduce customers’ ability to accept higher prices and lead to even longer and more unpredictable payment terms.

SME suppliers in emerging markets will face a double whammy of increased costs and reduced revenue, making it more challenging for them to maintain profitability.

InvoiceNxt helps to overcome these challenges: Suppliers can easily request earlier payment against a discount. Payment in minutes instead of months. This allows suppliers to restock faster and sell more goods or services with their margins. For example, if a supplier receives $25,000 paid 60 days early against a discount of 3%, this enables them to purchase goods for the same amount and may allow them to resell it within 60 days with a profit margin of 30% and more. This way, they can earn an additional profit, which can help offset the impact of higher interest rates.

This is the hour for Corporate Social Responsibility (CSR)

Large corporate buyers can support their SME suppliers with urgently needed cash flow, which helps them to maintain their production and sales capacity. By providing early payment to their SME suppliers, large corporates can help their suppliers to access the capital they need to run their businesses and stay competitive.

Without InvoiceNxt, it is virtually impossible for corporate buyers to enable early payment programs at scale, especially not for the longtail of SME- and MSME suppliers, even if they wanted to. InvoiceNxt is technically installed in hours and automates the entire process end-to-end. Finally, responsible buyers can directly support the business partners who need it most.

The interest rate hike has far-reaching consequences for businesses worldwide, especially SME suppliers in emerging markets. However, by accessing early payment programs and accepting discounts for earlier payments, SMEs can offset the impact of higher interest rates. Additionally, large corporate buyers can play a vital role in supporting their SME suppliers through CSR initiatives, which benefits all.

InvoiceNxt automates supplier finance, allowing immediate payments at zero marginal costs for corporate buyers and lenders.

InvoiceNxt is an enterprise SaaS solution designed especially for emerging markets. It is focused on digitising B2B transactions between buyers and suppliers and offering fuss-free early payment in the form of supply chain financing to suppliers ( large, medium & small, and micro enterprises) regardless of how small the invoice amount is. InvoiceNxt is ESG-inclusive and aids corporates in achieving their net-zero targets.

Reach us at contact@invoicenxt.com for all your questions.

Related Articles