The small and medium-sized enterprise (SME) market segment is highly coveted by banks wishing to expand their transaction banking franchise. After all, SMEs account for more than 96% of all Asian businesses, according to Asian Development Bank (ADB), and sustain two out of three private sector jobs in the region.
But for SMEs in a growth phase, access to cheaper funding remains a perennial problem. Their options are limited, and often access to the loan market is restricted due to lack of collateral assets to secure the loans.
Apart from financing, SMEs are facing other pain points, as noted in The Asset Triple A Treasury, Trade, Supply Chain and Risk Awards 2019. For instance, Singapore-based internet company Sea Limited has been growing aggressively, and often needs to open new accounts in new jurisdictions. This results in a lack of visibility in its cash balances regionally, which translates to a low investment yield on its excess funds.
Through its service provider United Overseas Bank (UOB), Sea Limited was able to gain visibility and access to its accounts regionally, providing convenience to its treasury team who can now glean an overview of the group balances.
In another case, UOB implemented a solution enabling Singapore real estate agency OrangeTee to address its reconciliation challenges by helping the company automate the process. The bank’s host-to-host connection also further improves the overall operational efficiency of its payment process.
Having grown significantly during the past few years, the Fei Siong Group, which manages its own hawker centre, required a holistic cash management solution to better manage its payables and collections. Being a traditionally cash-heavy business, it was keen to attain visibility of the group's cash positions across its various operating entities at any point in time via a single banking platform.
Its service provider UOB implemented cash management solutions enabling the company to streamline the receivables management process through a bulk cash offering. This allowed the company to move away from cash handling to digital payments.
Tak Fook International Trading, which engages in the manufacturing and trading of clothing apparel, was able to extend payment terms with suppliers under the vendor prepay solution provided by Standard Chartered. The suppliers have the option to receive early payments from the bank and enjoy attractive financing rates, which depend on Tak Fook’s risk.
Another interesting solution implemented by Standard Chartered was initiated for its fintech client Camel Financial, which focused on digitizing global trade through their innovative Digital Trader, an end-to-end solution for cross-border B2B trade.
The bank was able to address Camel’s various pain points, including account management and reconciliation, liquidity concentration between sub-accounts and master accounts, FX rates for US dollar to China renminbi when receiving US dollar payments from buyers to settle in renminbi, and visibility of sub-accounts.
For another SME, Standard Chartered implemented a solution via SWIFT Net for Suguna Food and Feeds Bangladesh, which used a network of multiple banks to manage their entire collection from their dealers located throughout the country. Processing payments from different banks proved to be complex, time consuming and pose reconciliation risks as it required using different modes of payment.
These challenges were addressed through a direct debit instruction facility for collecting funds from multiple banks to a central collection account that allows Suguna Food to easily monitor their daily collection. With the help of the online payment suite, the company could then execute all sorts of online payments, such as vendor payment, salary payment and utility payment.
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