Mashreq, one of the leading financial institutions in the UAE, have launched their ‘Supplier Finance’ program to facilitate easy access to working capital for SMEs in the region.
The new initiative leverages the credit worthiness of larger buyers to provide a more cost-effective early payment to their smaller suppliers thereby reducing the overall cost of financing the supply chain. The program complements Mashreq’s existing market leading receivable finance solutions which offers a one stop for client end-to-end supply chain finance needs.
Globally, SMEs play a pivotal role in shaping economies. According to figures cited by the World Bank, in the Arab world alone, SMEs make up around 97 per cent of businesses, employing half of the workforce –about 150 million people –and accounting for about 40 per cent of gross domestic product. It is therefore critical that SME businesses, otherwise sparingly catered for by the financial services sector, have ready and uninterrupted access to adequate capital if they are to thrive and make a positive impact on their ecosystem.
A pre-pandemic report from the International Monetary Fund noted that increasing SMEs’ access to finance in the MENA region to one comparable with the average level of emerging and developing economies would raise annual growth by 1 per cent potentially creating up to eight million jobs in the Arab world by 2025.In addition, socially responsible organizations have recognized the strength of ‘Supplier Finance’ programs as a potent tool towards solving the inherent problem the financing gap facing SMEs.No surprise that supply chain finance has outpaced traditional trade finance in terms of market revenue in recent years.
Victor Penna, Co-Head of Global Transaction Banking at Mashreq Bank, commented; “Increasing the financial and environment sustainability of supply chains is becoming more and more important to corporate players in the Middle East. We are pleased to be delivering programs that support these goals whilst helping close financing gaps for SMEs.”
Mashreq’ssupplier finance programs are intended to benefit suppliers in several ways; other than ensuring a steady source of cost-effective working capital it improves the collection process and reduces overhead costs. In turn the buyers can improve their working capital cycle, increase the efficiency of payment management and most importantly strengthen the supply chain network, driving business growth.
Aligned with Mashreq’s vision of maintaining environmental sustainability, the initiative encourages buyers to support supplier groups who are contributing to sustainability initiatives. A state-of-the-art 24×7 digital delivery channel available to both buyers and suppliers provides end-to-end transaction visibility and remote, easy access to transactions without the need to physically visit branches.