The challenge

Like many other SMEs, Aqina Poultry was becoming more receptive to using digital technologies to enhance its business operation. The COVID-19 pandemic accelerated the adoption of digital solutions especially in banking services as traditional over the counter banking services were disrupted by restrictive measures such as physical distancing, reduced operating hours and movement restrictions. Digital financial services could effectively bypass those restrictions.

The solution

Aqina Poultry’s bank, OCBC, partnered with market leading business-to-business (B2B) supply chain system providers in Malaysia and officially introduced their digital invoice financing (DIF) solution specifically tailored to help the company move from traditional bricks and mortar banking to digital banking without any integration costs.

By leaning towards the more established buyers’ payment capability in the supply chain, this solution also enables the company to have access to simple working capital financing without putting up any collateral. This is critical as most SMEs lack tangible collateral to enable them to secure adequate traditional banking loans to fund their growth.

Traditional credit evaluation and transaction drawdown of trade financing also involves a lot of documentation being moved from borrower to bank and within the bank. DIF eliminates these. This truly paperless process not only saves the administrative hassle of submitting paper documents to the bank but is also ‘green’ with very little carbon footprint.

By taking underlying commercial data from the system providers, the risk of fraudulent transactions is hugely mitigated while enabling straight through processing thus eliminating potential human error when transposing information from paper to system.

Best practice and innovation

By leveraging historical transaction data of Aqina Poultry Sdn Bhd with targeted buyers in the fast-moving consumer goods (FMCG) market via these supply chain systems, OCBC can quickly assess their receivables quality and offer the company a DIF facility without having to rely on traditional data such as the past three years audited financials and past six months of main operating account statements.

Besides having a simple and fast credit line approval, drawing down on the financing is very easy. Aqina does not need to submit any physical supporting documents such as invoice and transport document or the scanned copies. The company may request finance digitally once it has generated e-invoices for its buyers in the system.

The system provider at Aqina’s request will transmit the data to OCBC for processing. DIF allows Aqina to unlock the cash flow and monetise sales almost immediately after the goods have been accepted by the buyers. Furthermore, the company does not need to provide any tangible collateral to secure the facility.

Key benefits

• Cost savings.

• Process efficiencies.

• Increased automation.

• Risks mitigated.

• Errors reduced.

• Manual intervention reduced.

• Increased system connectivity.

“Usually it is very difficult, especially for a small trading company like ours to secure an additional credit facility as we lack tangible collateral. So a working capital financing facility that leverages our existing supply chain provides cash flow which is a vital lifeline having additional cash to support day-to-day operations or business expansion to accept more orders.”

Tan Ching Long, Chairman/Director