Multifinance Disbursement – Definition and Role in the Financial Industry

Multifinance industry in Indonesia has been going strong since it was introduced to the Indonesian market in 1974. As the number of business corporations is growing steadily over the past five decades, multifinance industry is slowly gaining traction as a popular method of financing for companies across Indonesia. AdIns, one of the most notable independent software service providers in Indonesia, is also participating in the Indonesian multifinance industry in this regard. To support its clients, AdIns offers the multifinance disbursement service in the form of AdIns’ multifinance core system, CONFINS. 

Simply put, multifinance disbursement is the act of paying out or disbursing money. This act is marked by spending some money from the available fund to perform payment to an external party. Financial disbursement in the multifinance industry is especially notable because of its characteristics in facilitating payment from the clients to their financial providers. Since multifinance sector does not allow direct payment from the clients to their service providers or vice versa, loan disbursement is particularly popular as a method to make payment of certain commodities. 

The usage of loan disbursement as a loan payment method is as such that many financing companies in Indonesia use this method to their clients. Usually, the financing companies store all sensitive information regarding the disbursement process after the loan disbursement has taken place. The details consist of identities of the related parties, payment date, amount, and the method of the payment. Through a third party, the loan disbursement process takes place as the borrower goes on with the payment process. 

As a result, loan disbursement takes up the role as the most commonly used payment method for loan borrowers. Major banks across Indonesia offers the disbursement service for all clients that require financial assistance. Usually, the requirements for clients to apply for financing assistance are as follows: 

1. Is currently an active member in one of the major banks in the country 

2. Willing to sign the Credit Agreement Document (which covers the terms and conditions for the provision of financial assistance) 

3. Complying the rules and regulations within the Credit Agreement Document 

Requirements that are mentioned above are some of the most common criteria that a client must fulfill to receive a loan provided by the banks. By doing this, banks can ensure the legality and the willingness from the clients to follow the rules about the loan borrowing mechanism. Moreover, the loan lending services can assess the risk of the loan before it can proceed to the disbursement phase. 

After the clients have submitted all of the proper documents and required materials to proceed with the multifinance disbursement, the loan lenders can provide the disbursement either in full cash or infrastructure disbursement. This is intended to adapt to the borrowers’ needs in their business goals, so it is up to the borrowers to decide which kind of disbursement that they would like to receive from the lenders. 

Upon deciding which kind of disbursement that they want, they can have either the disbursement in cash (fiscal payment) or a non-cash disbursement. Non-cash disbursement usually takes form in the raw materials that are essential for the borrowers’ needs. This is especially important for business ventures that require a substantial amount of raw materials to begin the production phase immediately. When the fiscal payment is not significant enough for them to support their business, they will somewhat depend on raw materials to proceed with the production phase and receive profit quicker. 

To facilitate this, multifinance companies have several methods to provide a platform for the clients to request loan disbursement for them. One of such ways is the peer-to-peer lending (P2P lending) method. This method is marked by the practice of lending money to individuals or business enterprises through online services. These online services are particularly useful, given the complicated nature of the loan disbursement to the clients. As such, multifinance companies use P2P lending method extensively. 

The cooperation between multifinance companies and P2P lending services is also considered important in supporting numerous business enterprises across Indonesia. In 2019, this cooperation was extended to provide more coverage of loan disbursement for enterprises all over the country. Since many business enterprises in Indonesia require financial or raw material disbursement from multifinance companies to support their business, P2P lending is gaining traction from these ventures. This results in the Indonesian Financial Services’ Authority (OJK) providing a green light for multifinance companies to use P2P lending to provide loan disbursement to numerous business corporations in all over Indonesia. 

Finally, loan disbursement is a vital part of facilitating payment between the clients and their respective loan lenders from multifinance companies. Since there are no direct means to provide disbursement, P2P lending offers a way for them to perform the much-needed payment. Moreover, more and more multifinance services from either banks or companies in Indonesia are planning to broaden their disbursement services across the country. This can potentially result in more growing business enterprises that require financial assistance from these multifinance companies through loan disbursements.