The Indian agricultural sector, a crucial pillar of the nation’s economy, faces unique challenges that impede its growth. One such challenge is the working capital crunch experienced by both buyers and sellers within the agri-supply chain. Traditionally, in an agri-supply chain scenario, a buyer directly approaches a seller, receives the commodities, and has a credit period of around 30 days to settle the payment after quality checks.  While the extended credit period benefits the buyer, but creates bottlenecks for sellers, affecting their ability to: 

Limited Transactions: Due to the extended credit cycle, sellers are restricted to completing one transaction every 30 days. This hinders their ability to scale operations and capitalise on new opportunities.  

Cash Flow Constraints: Sellers face a cash flow squeeze as they wait for buyer payments, limiting their ability to purchase new stock and fulfil subsequent orders.

Samunnati, a leading agri-fintech company committed to “collective growth and collective prosperity,” functions as a financial intermediary within the agri-supply chain, bridging the gap between buyers and sellers. They offer a suite of financial products and services designed to enhance liquidity, transparency, and efficiency within the sector. Samunnati identified this critical bottleneck and introduced the innovative BTST model specifically designed for the agricultural sector. 

Samunnati’s BTST model streamlines the transaction process, injecting much-needed liquidity into the system. Let’s dive into how it works:

Buyer Initiation: The buyer initiates the process by raising a purchase order with Samunnati. 

Connecting the Parties: Samunnati acts as a facilitator, raising a purchase order with the identified supplier. 

Financial Bridge: The supplier raises an invoice addressed to Samunnati. In turn, Samunnati raises an invoice to the buyer reflecting the agreed-upon credit terms. 

Delivery and Verification: The supplier delivers the goods to the buyer, who then issues a Goods Receipt Note (GRN) upon verification of quality and quantity. 

Prompt Payment: Samunnati expedites the process by paying the supplier promptly based on the verified GRN. 

Buyer’s Payment Cycle: The buyer has the agreed-upon credit period to settle the payment with Samunnati. 

By introducing Bill to Ship to (BTST) with its streamlined process and prompt payment system, Samunnati has significantly improved the lives of stakeholders within the agricultural sector. With BTST in the picture, it has contributed substantially to enhancing operational efficiency and financial stability. 

Benefits to the Sellers: 

Improved Cash Flow: Sellers receive prompt payment from Samunnati upon verification of delivery, allowing them to purchase new stock more frequently and take on larger orders. 

Growth Potential: Improved cash flow unlocks the potential for sellers to scale their businesses and capitalise on new opportunities 

Benefits to the Buyers: 

Increased Purchasing Power: By leveraging Samunnati’s financial resources, buyers gain increased purchasing power, enabling them to secure better deals and negotiate favourable credit terms with suppliers.  

Improved Financial Standing: Transactions with Samunnati are reflected as a creditor relationship, not a loan, which can improve a buyer’s financial standing. 

This solution is making a tangible difference in the agri-supply chain. By bridging the working capital gap, BTST empowers to operate more efficiently, conduct more transactions, and ultimately, improve livelihoods. Here’s what some of the satisfied FPOs have to say about their experience with BTST: 

Our experience with Samunnati’s BTST solution has been transformative,” says Saraswathi Bai, Director of Taradevie FPCL. “The initial financial support of Rs. 10 Lakhs provided a springboard for our business growth.  We are grateful for Samunnati’s ongoing support as we plan for further expansion.  Beyond the financing, Samunnati also equipped us with valuable knowledge on financial management and responsible credit practices. 

Tamilselvan, Director of Araikkal FPCL, highlights the impact of BTST on their logistics capabilities. “Previously, we were limited by a single vehicle.  Thanks to Samunnati’s timely BTST financing, we were able to purchase an additional truck for Rs. 10 Lakhs. This has significantly expanded our reach, allowing us to supply a greater number of shops and fulfill more orders. 

BTST has been a game-changer for us,” says Jai Chandrana, CEO of Dhaval Agri Experts. “It allows us to pay farmers promptly while managing our own processing and export cycles.  Samunnati bridges the working capital gap, financing both farmers and suppliers.  This not only streamlines operations but also facilitates faster payments and better credit terms for processors like ourselves.

By eliminating middlemen and connecting us directly with farmers, BTST simplifies our sourcing process,” Chandrana concludes. “Samunnati’s flexibility and understanding of the agricultural trade are invaluable assets.  Since adopting BTST, we’ve expanded our export reach from 30-32 markets to 45 markets. Samunnati plays a vital role in aligning with the government’s vision of a normalized agricultural sector, where FPOs and processors collaborate to promote large-scale commercial farming. 

Samunnati’s BTST model stands as a prime example of innovative financial technology designed to tackle distinct challenges within the agricultural sector. By addressing the working capital gap, BTST facilitates and empowers both buyers and sellers, fostering a more vibrant and thriving agricultural ecosystem in India.