The challenge
Inchcape Asia decided to conduct a strategic review of its banking relationships, especially to identify committed and sustainable banking partners which can support its current and future business growth across the region in Singapore, Hong Kong and Brunei.
The company identified the following key objectives:
- Inchcape Asia was looking for working capital support for its local offices to finance its vehicle purchase from original equipment manufacturer (OEM) suppliers for its automotive distribution and retail business in these three countries.
- Inchcape was also looking at streamlining, digitising and managing the inventory financing process.
The solution
Inchcape Asia had to take this selection process through a request for proposal (RFP) and, knowing the timeframe required for completion was tight, UOB was able to prepare and submit its regional trade and inventory financing solution to the company for the three locations within just one week.
This solution enables Inchcape Asia to tap on the facility to finance its import of automotive vehicles and allows financing flexibility to cater to varying inventory holding requirements to meet different market conditions, sales momentum and inventory level management.
As such, Inchcape was assured that the solution offers the sustainability and flexibility to operate and cater to its business growth objectives.
The first draw down was completed by the Singapore office within three months from the date of mandate to credit approval to the solution being implemented.
Best practice and innovation
Sector insight – the RFP was launched when global trade was going through unprecedented uncertainties due to the COVID-19 impact. Across the board, almost all industries and sectors were adversely affected and commercial activities, including trade, distribution and retail, had almost come to a standstill as the government imposed social distancing and a lockdown. When approached for this opportunity and to ensure UOB could offer Inchcape Asia a sustainable banking partnership, the company worked closely with its Sector Solution Group and Business Intelligent Analytic group to ensure it fully understood its business nuances regarding the proposed solution and balance sheet commitment.
Security versus flexibility – while the proposed solution structure entails UOB taking security over the underlying automotive vehicles financed by the bank, it has also incorporated pragmatic practices to deliver operational flexibility:
- Per the facility agreement, UOB still maintains security against the vehicles purchased by Inchcape Asia.
- No impact to the vehicle sales process and consumer experience, the bank allows Inchcape Asia to retain control of the vehicles and provides the flexibility to release the vehicles to end users without layers of approval.
- The bank and Inchcape also simplified the security process by working collaboratively, sharing management information on a routine and regular basis to satisfy both the security mechanics.
End-to-end electronic process – the bank implemented the BIBPlus electronic banking platform to enable Inchcape Asia to initiate and transmit financing, rollover and repayment requests electronically. Once the transaction is processed, Inchcape Asia is able to retrieve the respective advices as well as inventory financing outstanding report electronically via BIBPlus.
Key benefits
- Substantial new working capital support.
- Extended facility tenor.
- Flexible and effective cost management through the tiered pricing approach.
“Our banking partner has looked beyond the current uncertainties we face and is committed towards building a mutual beneficial and trusting long-term relationship, reflecting both the quality of our business and the quality of the relationship with us,” says Adrian Lewis, Finance Director, APAC.
