"Most banks have acknowledged the digital transformation. All banks are looking at multiple strategies when it comes to adopting technology platforms to help their core product offerings."
Sarat Mohanty – Head, Global Supply Chain Finance Implementation, Standard Chartered Bank
In Demica’s recent webinar on Supply Chain Finance Best Practices in Asia-Pacific Markets, our expert panel discussed best practices when implementing an Approved Payables Finance (buyer-led) programme within the Asia-Pacific markets. Four key lessons came out of their discussion:
1. Remember that each country has its own specific requirements and processes
Something that might seem obvious from the outset, but Sarat Mohanty was keen to emphasise this: “Due to the different levels of maturity of each country’s market in the Asia-Pacific region, implementation of a supply chain finance programme has specific requirements depending on the nuances of each country.”
Local requirements play a big part in the challenges faced when implementing an Approved Payables Finance programme across the multiple jurisdictions within APAC. Each country has its own preferences in terms of languages, time zone, legislation, and currency as well as suppliers with different levels of understanding for the product and its benefits. Different working capital solutions also have different levels of interest in the region. For instance, one of the most popular payables working capital solutions in the West, Dynamic Discounting, is still in very early stages for the most part across the Asia-Pacific region.
2. Well-structured programmes are fundamental to succeed in such a diverse region
Having a clear structure to your Approved Payables Finance programme is key to ensure smooth and efficient implementation. Within the Asia-Pacific region, the long tail of suppliers has recently become the focus, as local regulators have started to actively promote SME financing. This creates the logistical challenge of onboarding a large number of suppliers in a timely and cost-effective manner.
James Li, CEO of Linklogis International: “Traditionally, when banks look at their SME finances, they face challenges with operational costs and are not always keen to implement an Approved Payables Programme.
This trend is changing, as the government and regulators are working with banks to focus their financing on SMEs rather than the established large suppliers. For example, in China the local banking regulator has given some measurable objectives to each of the banks to increase their SME business and customer base, however the banks still face challenges with onboarding SMEs due to the different structures each SME have when processing documentation”
The fundamentals of a well-structured and developed programme are key in such a diverse marketplace. This includes:
- Strong support from banks and other partners.
- Good conceptual alignment between the buyer and its suppliers.
- A solid stakeholder management framework.
- A robust technological platform that can deliver the product effectively to all parts involved.
3. Effective communication during the onboarding process
It’s critical to have a clearly structured and orchestrated approach when it comes to onboarding buyers and suppliers into each individual programme
Sarat Mohanty – Head, Global Supply Chain Finance Implementation, Standard Chartered Bank
Setting up any Approved Payables Finance programme often requires a significant onboarding effort to reach out to thousands of suppliers in their languages and to support them in their time zone. Clear and effective communication among the supplier and the onboarding teams can make the difference between the process taking a matter of weeks or several months.
At the centre of the implementation discussion, Supplier onboarding sticks out as one of the most critical parts of the successful rollout on any Approved Payables Finance programme.
Anna Jones, Managing Director at Financial Supply Chain Strategic Consulting, highlighted this: “There needs to be an exceptionally big focus on onboarding because it is a critical success factor. You can be motivated as a buyer, but if you get there and your suppliers are not interested or your procurement team does not know how to explain what supply chain finance is and its benefits, then that is seen as the most common failing of any platform.”
4. Use a robust platform that allows flexibility in delivery
You need a platform that is going to be secure and that will not only abide by your requirements but also the requirements of the third-party banks, if they are going to use your fintech platform.
Anna Jones, Managing Director at Financial Supply Chain Strategic Consulting
From a supplier perspective, it’s essential to have access to the programme through a platform that allows for operational smoothness; from beginning of the onboarding to the first invoice discounted. From a buyer perspective, flexibility is vital. Being able to flip between different funders working in local currency, adapt to local regulations but also offer the full spectrum of working capital solution products.
Our panel of experts agreed that selecting a robust technological platform provider is key to deliver a multi-product, multi-currency, and multi-funding solution to both the buyer and the suppliers, complementing this way the bank’s efforts. A strong platform can narrow the gap of all the challenges that a difficult implementation may pose, quick and simple supplier onboarding being one of them.
To learn more about how Demica can help you build a robust Approved Payables Finance programme using our cutting-edge platform, get in touch with us.
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Director, Head of Payables Finance Product