C2FO, which claims to be the world’s on-demand working capital platform, announced its further expansion into Mexico with the creation of a Mexican subsidiary.
This move bolsters C2FO’s global presence and “reinforces its commitment to empowering all businesses with fast, flexible and equitable access to working capital.”
C2FO’s growth across the Mexican market also “unlocks fresh opportunities for new and current enterprise customers and their suppliers.”
Established relationships with three major enterprises, “including Walmart México, already offer local suppliers access to C2FO’s working capital solutions.”
New marketplaces will be launching soon with three enterprises, “including Grupo Cinemex and Grupo Posadas.” But millions more micro, small and medium enterprises (MSMEs) need easier access “to fast, flexible and equitable working capital — something that could transform the Mexican economy.”
The 4.5 million Mexican MSMEs account “for 52% of the country’s gross domestic product (GDP).” Despite their significant contribution, a 2022 McKinsey Global Institute study commissioned “by C2FO found that Mexican MSMEs encounter substantial financial challenges that hinder their ability to unleash their full economic potential.”
In today’s high-interest rate environment, many MSMEs encounter hurdles in maintaining a flexible cash management strategy and securing working capital “to conduct and grow their businesses.”
C2FO’s study highlights key challenges MSMEs face, “including late payments from buyers and significantly higher interest rates than larger enterprises.” Additionally, traditional large financial institutions primarily “cater to other market segments, neglecting the specific needs of MSMEs.”
This is problematic for the Mexican economy “due to the high number of MSMEs in the country.” Many businesses have their capital “locked up in receivables instead of growing their company, creating new products or expanding their teams.” Without long-term solutions, Mexican companies, their employees, and the broader economy “will continue to suffer the squeeze — and stall growth.”
Finding Solutions to Unlock Working Capital for Mexican MSMEs
A long-term and effective solution is one that “benefits both sides of the supply chain and incentivizes enterprise buyers to participate.” C2FO provides a new breed of solutions that reimagines how suppliers are paid and deliver real benefits “for both enterprises and suppliers.”
To ensure an enterprise chooses the right solution “that benefits its business and its suppliers, company leaders should look for solutions that offer:”
Flexibility in funding
Traditionally, financial programs that “fund supply chains tend to run through a single bank or lender that provides capital to pay an enterprise’s invoices ahead of schedule.” The updated versions of these programs “allow an enterprise to fund its programs from multiple sources, including its balance sheet, and to switch between those sources quickly.” Plus, the program can be tailored “to allow suppliers of any size to participate.”
Customization and segmentation
Many existing financial programs that “fund supply chains are one-size-fits-all, and each supplier is offered the same terms with no room for adjustment.” Newer solutions, however, offer dynamic discounting, “allowing suppliers to choose a discount rate for early payment that works for them.”
Excellence in service
Typically, supplier finance solutions “automate many of their processes.”
The best programs pair automation “with a human touch to deliver efficient customer service and advisory expertise.”
Next-Generation Steps to Opening Up Liquidity
C2FO’s dynamic working capital platform “is a game-changer for enterprises looking to solve the working capital crunch for their business and their supply chain.”
The company’s platform and suite of working capital solutions “provide enterprises and their suppliers flexibility, the ability to customize solutions and premium customer service to help companies along the way.”
C2FO’s Early Pay platform “incentivizes large enterprises to pay their suppliers sooner — when the suppliers choose to offer a discount on their invoices. This win-win solution benefits all participants.” Buyers improve their margins through “the discount that suppliers are comfortable providing, and suppliers get paid faster.”
At a national level, the potential impact of this is significant. As found by the McKinsey study, implementing a working capital platform “with nationwide coverage in Mexico can unlock up to $30 billion of working capital for MSMEs.”
By unlocking working capital, MSMEs can, in turn, “reinvest capital into expanding operations, creating new products, hiring employees and more.”
This reinvestment is significant and the McKinsey study found that it could lead to an additional 1.1% of the country’s GDP and up to 1.3% growth in employment. Among the numerous advantages, this initiative will enhance MSME participation and resilience in supply chains, mitigating their susceptibility to liquidity constraints. Download key statistics in English here and in Spanish here.
C2FO’s Mexico Co-Managing Director Jerónimo Osio said:
“MSMEs are a major part of the Mexican economy, and their challenges impact all Mexicans. The Mexican economy has a huge opportunity for growth, which will be fueled by enterprises embracing a liquidity solution for themselves and their suppliers.”
C2FO’s Mexico Co-Managing Director Patricia Martínez added:
“We want to make working capital available to companies in Mexico and are proud to deliver solutions that put control of capital back into the suppliers’ hands. With our expansion into Mexico, we are unlocking fast, flexible and equitable access to working capital for suppliers of all sizes across the country.”