Case Study: How CashPayWay Rescued SMEs from Liquidity Crunch

Small and medium-sized enterprises (SMEs) often face unexpected cash flow disruptions—from delayed receivables to sudden operational expenses—that can threaten their day-to-day operations. In this case study, we explore how CashPayWay partnered with three diverse SMEs in 2024 to provide rapid, transparent credit card cash advance solutions. By tailoring micro-advance programs, automating approval workflows, and integrating seamless repayment schedules, CashPayWay enabled these businesses to overcome liquidity gaps, maintain payroll, and invest in growth without resorting to costly traditional financing.

Table of Contents

• Client Profiles
• Challenges Faced
• CashPayWay Solution Design
• Implementation Timeline
• Quantitative Results
• Qualitative Outcomes
• Key Success Factors
• Lessons Learned
• Best Practices for SMEs
• Conclusion

1. Client Profiles

Three SMEs from different sectors participated in CashPayWay’s pilot program:

• AlphaTech Solutions
  A B2B software development firm in Seoul with 25 employees, serving enterprise clients on milestone-based payment terms (30–60 days).
• GreenFields Organics
  An agricultural co-op in Jeonju managing seasonal produce distribution to domestic retailers, reliant on upfront harvest costs and perishable timelines.
• UrbanEats Café Chain
  A four-location coffee and brunch café operator in Busan, experiencing fluctuations in foot traffic and vendor payment delays.

2. Challenges Faced

Despite healthy long-term prospects, each SME encountered acute liquidity constraints:

2.1 Delayed Receivables (AlphaTech Solutions)

• Enterprise clients extended payment terms from 45 to 75 days due to internal approvals.
• Payroll obligations and vendor invoices created a shortfall of KRW 45 million monthly.

2.2 Seasonal Harvest Financing (GreenFields Organics)

• Procurement of seeds, fertilizers, and labor required KRW 30 million each harvest cycle.
• Wholesale buyers remitted payments only after delivery, leaving a 40-day funding gap.

2.3 Vendor & Rent Overruns (UrbanEats Café Chain)

• Unexpected equipment repairs and rent escalations led to KRW 10 million in unplanned expenses.
• Traditional bank loans required collateral and took 2–3 weeks to disburse.

3. CashPayWay Solution Design

CashPayWay developed customized advance programs leveraging each client’s existing corporate credit card facilities:

3.1 Flexible Advance Limits

• AlphaTech: Up to 50% of monthly payroll cost (KRW 22.5M) via direct advance.
• GreenFields: Tiered advances aligned to expected harvest volumes (KRW 10M increments).
• UrbanEats: Revolving advance line of KRW 15M to cover vendor and lease obligations.

3.2 Automated Pre-Qualification & Approval

• Integration with clients’ accounting systems (ERP or quickbooks-style software) to pull cash flow forecasts.
• Soft-pull credit assessments and historical transaction analysis enabling 95% pre-approval accuracy within minutes.

3.3 Multi-Channel Disbursement

• ATM code issuance for immediate cash (UrbanEats emergency repairs).
• Direct bank transfers for payroll (AlphaTech).
• Convenience checks for vendor payments (GreenFields).

3.4 Repayment Scheduling & Automation

• AlphaTech: Repay advances over 60 days in 4 equal installments aligned to client invoicing cycles.
• GreenFields: Seasonal repayment—one lump sum 45 days after harvest.
• UrbanEats: Revolving balance repaid from daily credit card receipts, auto-drafted weekly.

4. Implementation Timeline

5. Quantitative Results

Within three months, the pilot program delivered measurable financial benefits:

• Total Advances Disbursed: KRW 125 million across three SMEs.
• Average Approval Time: 8 minutes from request to fund availability.
• Average Effective Cost: 4.5% flat fee + 1.2% APR pro-rated—substantially lower than 15%–20% bank overdraft rates.
• Liquidity Gap Closed: 100% of immediate cash shortfall addressed within 24 hours for all clients.

6. Qualitative Outcomes

Beyond numbers, clients reported significant operational and strategic improvements:

6.1 Business Continuity & Peace of Mind

• AlphaTech avoided late payroll penalties and maintained 100% staff attendance.
• GreenFields secured timely harvest inputs, preventing spoilage and maximizing yield.
• UrbanEats completed café refurbishments without service interruptions.

6.2 Strengthened Supplier Relationships

• Vendors offered better rates due to on-time payments enabled by CashPayWay advances.

6.3 Strategic Flexibility

• Clients invested in marketing promotions and small equipment upgrades, driving 12% revenue growth over the pilot period.

7. Key Success Factors

• Tailored Program Design: Aligning advance amounts and repayment to each company’s cash conversion cycle.
• Seamless Integration: Automated data flows minimized manual effort and errors.
• Transparent Pricing: Clear cost breakdowns fostered client trust and repeat usage.
• Responsive Support: Dedicated account managers available 24/7 for urgencies.

8. Lessons Learned

• Flexible Repayment Terms Matter: Matching paydown schedules to revenue inflows reduces default risk.
• Data-Driven Eligibility: Historical transaction analysis improves approval accuracy and risk management.
• Education & Training: Clients needed onboarding on best practices to avoid over-reliance and optimize fund usage.

9. Best Practices for SMEs

1. Assess Cash Flow Cycles: Map inflows and outflows to determine ideal advance sizing and timing.
2. Diversify Funding Sources: Combine micro-advances with small credit lines or invoice factoring for resilience.
3. Monitor Utilization: Keep advance usage under 30% of total receivables to maintain credit health.
4. Review Cost Structures: Compare flat-fee advances against traditional overdrafts or short-term loans.
5. Invest in Automation: Integrate accounting and banking APIs to reduce latency and manual errors.

10. Conclusion

This case study demonstrates that, with the right partner and program design, credit card cash advances can become a strategic tool for SMEs—bridging liquidity gaps, fostering growth, and preserving operational continuity. CashPayWay’s pilot with AlphaTech Solutions, GreenFields Organics, and UrbanEats Café Chain underscores the importance of tailored advance structures, automated workflows, and transparent pricing. By following the lessons and best practices outlined, other SMEs can replicate this success, transforming cash advance solutions from a last-resort emergency measure into a proactive component of their financial strategy.