Photo of Wang Rongli and Wang Ningning, Haier Singapore Investment Holding Pte Ltd and Jason Zhou, DBS.
Rapid growth led to Haier Singapore, regional headquarters and global sales and procurement centre for smart home appliance Haier Group, to seek a customised off-balance sheet solution to improve its overall working capital and liquidity management. The resulting scalable, digital solution has enabled Haier Singapore to drastically simplify and hasten the submission of invoices to obtain off-balance sheet financing.
Business Development Director
Haier Group Corporation, through its subsidiaries, is a leading global manufacturer of home appliances such as refrigerators, washers, freezers, consumer appliances and integrated kitchenware. The group, which is increasingly focused on IoT enabled appliances for the smart home, employs 66,000 worldwide.
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Scalable digital financing solution key to Haier Singapore’s growth ambitions
With the rise of the internet of things (IoT), Haier Group has transformed from a traditional manufacturing enterprise into an IoT focused supplier of smart appliances for the home and is one of the world’s leaders in the smart home space.
Haier Singapore Investment Holding Pte is the Haier Group’s regional headquarters as well as global sales and procurement centre. Given its growing importance to the group and expected accelerated commercial growth across the group, Haier Singapore was seeking a customised off-balance sheet solution to improve its overall working capital and liquidity management.
A critical requirement of the financing solution was that it must be scalable, as this was deemed essential for supporting the group’s strategy for rapid international growth.
Haier’s growth strategy involved capturing a deeper market share in various countries. It was therefore critical to expand relationships with distributors in each market to drive sales.
DBS’s financing solution empowered Haier to sell into new distributors and customers, while mitigating potential credit risk from increased selling activities.
DBS Singapore was able to quickly provide the optimal solution addressing Haier Singapore’s needs with a non-recourse accounts receivable purchase facility. The uniqueness of this solution lies in its scalability via DBS’s digital banking platform, DBS’ IDEAL Open Account Trade (iOAT).
DBS Singapore’s solution leverages an entirely online process to facilitate transactions. Haier has traditionally relied on paper-based submission processes when submitting invoices for financing, so obtaining internal consensus to amend operational processes in a relatively short time was a feat.
Best practice and innovation
To meet the scalability objective, Haier collaborated with DBS to design and implement a digital solution whereby a summary list of invoices can be submitted via DBS’ IDEAL Open Account Trade (iOAT) digital banking platform, for financing.
For the project, both the Haier and DBS teams collaborated over just a few weeks to brainstorm, amend and implement this online process.
Leveraging online and digital submissions immediately enabled Haier Singapore to:
Simplify and hasten the submission of invoices to obtain off-balance sheet financing. This eliminated paper documentation traditionally required for funding, and enabled Haier personnel to transact while on the road and ‘on the go’.
The digital solution is accessible across Haier Group’s network of over 20 subsidiaries, irrespective of locations, time zones, and currencies, meeting the scalability objective demanded at the outset and bringing prompt financing via digital means to the Haier group companies.
Overall, the solution has enabled Haier Singapore to achieve its financial goal of improving the balance sheet and the delivery of financial targets.
With the ability to promptly send invoices for financing, Haier was able to decrease its DSO by more than 10%, with the added benefit of driving sales by growing its distributor base.