The challenge

The company is catering to the healthcare needs of over 30 million Indians, with a partner network of over 90,000 doctors, 7,000 hospitals, 3,000 diagnostic centres and 2,500 pharmacies, covering over 23,000 geographical pin codes in India. Prior to COVID-19, Medibuddy’s service providers and vendors (ie labs and hospitals) would provide 30-60 days credit period to Medibuddy.

The pandemic led to mass testing and hospitalisation. This resulted in exponential pressure on hospitals and laboratories. There was a strain on the medical industry due to a shortage of resources. This forced the industry to move from credit to advance payment terms, which impacted the supply chain dynamics, putting Medibuddy’s finances under strain bringing about new challenges.

• Medibuddy needed to pay its service providers in a timely manner while effectively managing working capital while ensuring no liquidity crunch.
• After due analysis of multiple options to overcome the working capital crunch, cards were considered as one of the options. The challenge then was that most of these service providers did not accept cards as a payment mode.

Since time was of the essence, an effective solution needed to be put in place to address the working capital requirements.

The solution

HSBC worked alongside Medibuddy to arrive at an innovative solution in collaboration with a local fintech provider. The corporate card solution implemented helped Medibuddy to optimally manage the working capital gap.

The solution involves three parties; HSBC, Medibuddy and a fintech. The fintech debits the payment amount to the card (issued by HSBC to Medibuddy) and correspondingly the service providers receive funds in the form of an electronic transfer, thereby converting the set of non-cardable operational payments into cardable expenses for Medibuddy.

The bank has integrated with the fintech provider to create a solution wherein the payment authorisers of Medibuddy can login to the fintech platform and upload an expense file. These payments can then be carried out via the HSBC Corporate Card either on a transaction level basis or bulk upload.

Migration to this platform was carried out in a seamless manner without affecting Medibuddy’s day-to-day operations.

Best practice and innovation

By virtue of this innovative cards solution, Medibuddy has now converted the set of non-card operational expense payments into card expenses through a single platform and gained an interest-free credit period of up to 52 days on its service provider (vendor) expenses.

This solution not only adds efficiency in terms of working capital management and payment automation, but also makes it easier to scale up and support growth as Medibuddy adds new service providers, since they can be on-boarded on the fintech platform in a seamless manner.

Since the implementation of this solution, Medibuddy has onboarded more than 100 vendors via the fintech portal and is processing more than 500 transactions each month.

The total value of transactions processed is greater than US$6m equivalent in the last ten months since this solution went live.

Key benefits

• Working capital efficiency.
• Streamlined payment automation.
• Improved visibility and control.
• Supports future growth.
• Enhanced supplier relationships and loyalty.

“Thanks to the HSBC fintech module, not only were we able to solve the problem in hand for lab/hospital advances, but we were also able to use this as a standard template for solving the advance payment issues across other processes. Due to this the working capital is being managed optimally,” concludes Sharat Bhat, Director – Finance.