Dana, the local fintech company that enables digital platforms and banks to offer digital loans to micro-small-medium enterprises (MSMEs) and individuals instantly, has announced a partnership with Merchant Bay, the platform that has been digitizing the ready-made-garments (RMG) and apparel supply chain.
Under the partnership, Merchant Bay will use Dana’s embedded lending engine to generate business credit scores of SMEs to facilitate end-to-end digital credit financing for RMG factories.
CEO of Merchant Bay Abrar Hossain Sayem said: "We are delighted to partner with Dana Fintech. Merchant Bay and Dana will jointly come up with an easy solution for SMEs in the readymade garments sector in Bangladesh. We are determined to turn the long process that SME companies currently have to go through with loans and invoice finance into a real-time process. Our digital revolution in Bangladesh's readymade garments sector got a new dimension through this agreement."
“This tie-up will bring SME RMG factories under digital financial inclusion leveraging data-driven insights and digital lending capabilities for lenders,” he added.
Dana Fintech is an embedded lending platform for banks and network partners to offer digital loans and BNPL to SMEs and individuals through digital credit scoring API, BNPL engine and digital underwriting engine.
This means RMG factories registered under the Merchant Bay platform will be able to avail working capital financing and invoice financing, as well as financial wellness solutions for the workers of their factories through lending partners.
Receivable or factoring financing is a term that describes several different techniques a business can use to raise funds against the amounts owed to it by its customers in outstanding invoices, also known as its trade receivable or account receivable, therefore, receiving funds based on issued invoices.
“Those invoices refer to the purchases made, but the payment hasn't been received yet. From an accounting perspective, these are accounts payable and accounts receivable. For example, let’s say Dhaka Tribune depends on suppliers who provide drinking water filters, and other such office suppliers. But they are not paid instantly but as per a pay cycle which might be more than 30-60 days sometimes,” explained CEO of BD Finance Kyser Hamid.
“This means that the working capital of such small businesses are stuck with its customers and for them to operate, they can access loans against those invoices from financial institutions, for which we give them like 70-80% of the pay off which they pay back later,” the CEO of the non-bank financial institution (NBFI) further added.
Earlier this year, the central bank has asked all banks and NBFIs to utilize digital trading platforms in providing MSMEs access to receivable financing.
Currently, Dana is working with three network partners and two leading commercial banks, being backed by Accelerating Asia.
Under the partnership with Merchant Bay, small scale RMG factories will be enabled for digital financing through partner banks on the same platform for instant end-to-end digitally originated SME loan and invoice finance applications.
Merchant Bay is a B2B tech-enabled platform created as a critical channel for sales, marketing and order management of apparel. Merchant Bay’s multisided platform as a service creates supply chain visibility and makes factories take data-driven decisions to increase efficiency. Merchant Bay is now connected to more than 300 SME RMG factories.
