ASK Foods employs 107 people most of the year. But during peak season, the workforce may increase to as many as 400 workers and farmers. ASK Foods was established by three brothers in 2008 in the village of Livoq in eastern Kosovo. It supplies all natural juices, jams, spreads and vegetables to Interex and Meridian Express. Adding employs with 45-60-day invoice payment terms for delivered goods makes it difficult for ASK Foods to take advantage opportunities at the busiest time of year.
Working Capital to Grow
Agriculture, Kosovo’s biggest industry, is dominated by small farmers and producers who find it difficult to expand their businesses. They find it difficult to access bank loans due to high collateral requirements, so they are often unable to increase their orders when buyers demand it, losing out on business.
Supply Chain Finance (SCF), sometimes called ‘reverse factoring’, is a financing mechanism that works with large corporate buyers to provide working capital to their suppliers. SCF relies on the creditworthiness of the large buyer rather than the smaller suppliers. This reduces the risks for the lender, improves access to finance for the suppliers, and creates efficiency for the buyer.
AGC launched a pilot in Kosovo to provide SCF to small and medium-sized enterprises (SMEs) in the supply chain of 2 supermarkets: Meridian Express and Interex. Using the online platform, ASK Foods was able to select which invoices it wanted to finance, even invoices with values as low as $5. Supply chain financing provides the working capital when ASK Foods needs it to increase production for additional orders.
Establishing Supply Chain Financing
SCF is a new concept in Kosovo, and AGC is providing training to the supermarkets and their suppliers to demonstrate its viability. As of March 2014, AGC partners have provided financing to 4 SMEs for over 6,000 invoices. The pilot has proven successful with 100% repayment rate. AGC will expand SCF to more of the supermarkets’ SME suppliers as well as additional supply chains in Kosovo and regionally. ASK Foods represents a typical client that can benefit from Supply Chain Finance and demonstrates the flexibility to finance smaller SME suppliers and low value transactions. Hear what ASK Foods has to say about AGC’s program.