Webinar Q&A: Investing On The KredX Platform

Q&A

Q. Can you please elaborate on the risk mitigation process at KredX?

A. At KredX, we follow a stringent multi-pronged Risk Mitigation process that minimises risks involved at multiple levels basis the risk evaluation of the business, the enterprise, and their relationship status. We make sure to carefully look through in detail every business and its relationship with the enterprise while assessing the borrowers’ financial stability. Based on the above criterion, a KredX score (which has been further refined to take into account for more parameters) is generated to help investors take informed decisions during deal purchase. You can find all this information and more details about our risk mitigation process here.

Q. Why is the escrow account more secure? And do you work with a bank for that?

A. Transactions are routed via KredX-operated escrow account. This provides an added layer of security against credit risk, as a result of the discounting mechanism. We currently work with ICICI Bank as our banking partner for all transactions.

Q. Why is it that KredX offers its services only to big corporates and not SMEs?

A. As India’s leading Integrated Cash Flow Solutions Provider, KredX helps corporates, startups, SMEs, and large enterprises with their cash flow challenges. However, keeping the best interest of our investors in mind, we only discount invoices raised to blue-chip companies that have credibility in terms of funding from large investors with good corporate governance and good financials and payment history.

Q. Does the payment come directly from the enterprise to escrow account or from enterprise to vendor account and then to escrow account?

A. When the enterprise makes a payment to its vendor who has availed KredX’s invoice discounting services, the amount gets transferred to a third-party escrow account. The amount in the escrow is verified by KredX with the respective invoice of the vendor to ensure that there is no mismatch between them and then transferred to the investors.

Q. In the KredX Score 2.0, how does dynamic scoring help investors in considering the deals from the vendor/company in future?

A. In KredX Score 2.0, we have in place a dynamic scoring system which takes into account the history of the portfolios of vendors/enterprises. The dynamic score is intended to help our investors make a well-informed decision when investing on the platform.

Q. How do you ensure that no fake invoice is uploaded?

A. This forms the very crux of our risk mitigation process, as mentioned above. We employ strict scrutiny right from the time a vendor approaches us until a vendor is onboarded after the satisfactory screening of financials and its relationship with the enterprise it supplies to. A tri-partite ​undertaking​ is created and signed, involving KredX, the vendor, and the corporate. Among other clauses, this undertaking ensures that the enterprise will only credit the invoice amount to the ​Escrow​ account created by KredX on the vendor’s behalf unless otherwise supported by a NOC issued by KredX. Once the vendor has been onboarded onto the KredX platform, we verify the invoices presented by the vendors to ensure that they are genuine and unpaid with confirmation of the amount, the payment status and various other details of the invoice directly from the enterprise.

Q. Are these KredX reports generated online as and when they are created?

A. Deal reports are made available on the KredX dashboard for use at the time of deal purchasing. These reports provide valuable insights into the deals, allowing investors to make a well-informed decision, and we would request all investors to carefully read and assess the information made available to them.

Q. Do you have a reference document meant for dummies? That we can read and understand the terms you are using or the reports that you are publishing into our mail boxes. Perhaps, an explanation on each technical/financial term used?

A. Thank you for your suggestion. We currently do not have a reference document at the moment but we will work on getting this created to help our patrons.

Q. Why do enterprises support KredX to confirm the vendor's invoices?

A. KredX’s offering helps vendors/suppliers of enterprise ease their working capital requirements. This, in turn, eases the entire supply chain in the business ecosystem. Deals are listed only after the undertaking is signed by the enterprise, and as such the enterprise is aware of the arrangement of the transaction.

Q. Will the new score give us more clarity on the delayed invoices from that enterprise?

A. The KredX Score 2.0 takes into consideration the past repayment history, and in case of any delays in the past, the subsequent score will be impacted, indicating an inconsistent payment history.

Q. As we have moved our Escrow account from Yes Bank to ICICI Bank. I asked your call center Rep. and she guided me to open that account with the provided information as Third Party Payee using Savings Account Type. I did the same. Now I got one email from your company stating we have to open the account using Virtual Payee option. Will there be any issues wrt to and fro of payments and receivables of money?

A. Different banking platforms have different functionalities and ways of getting the account payee added. Please be rest assured that there is no issue wrt to transactions to the KredX virtual account.

Q. What is the penalty if enterprise delays in paying the invoice ?

A. The same is mentioned in each agreement and we strongly advise patrons to read the agreements, reports, and all fineprints carefully before investing on the platform.

Q. Once a deal is booked, we are not able to see the detailed deal report. Can we have it available with the ongoing deals tab also?

A. As an end-to-end technology platform, we have made available all these details for our patrons. Investors can review the deal details, transaction note, and deal agreement once the deal is booked. Investors can also access the transaction invoice and repayment schedule once the deal is repaid.

Q. In the Past Deal Interface, the Deal Value is not mentioned. Can that be added ?

A. Investors can download the Transaction and Repayment summary report to fetch the deal details. For instance, if a deal is listed for 70 lacs, it will be mentioned on the platform as an upcoming deal. Investors can see that information there, however, not in past deals.

Q. Each deal in KredX has a minimum value for investing, say 3 lacs. But when we invest and the companies repay it in a staggered manner, we have balance in KredX that cannot be used for any of the current deals because the balance is less than min. required amount of 3 lacs. So the balance lies idle. Can you do something around this where we can use the idle balance to reinvest in deals.

A. Yes, we are working on something on these lines to help patrons utilise their idle money. We will keep you updated regarding the same.

Q. In the deal, you mention return as gross. Why not on a net return basis ?

A. We provide both; gross and net returns as Expected Gross Yield and Expected Net Yield in the deal details on your dashboard.

Q. Is there any recording for this session ?

A. Yes, you can watch the webinar recording here.

Q. When can we expect an auto invest feature?

A. Yes, we are working on something on these lines to help patrons utilise their idle money. We will keep you updated regarding the same.

Q. Format of the Deal Report also changing to show the new parameters being considered?

A. Yes, all parameters have been taken into consideration to design the new deal report for better understanding.

* Subject to credit risk approval and listing of invoices on the platform
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