With that, Asti had to find a suitable solution to manage its cash flow – and fast. In mid-2022, it sought assistance from HSBC and shared its pain points with the bank.
Taking into account Asti’s sales patterns and customer payment behaviour, HSBC recommended Receivables Finance (RF) – a fully digital solution that enables the company to raise cash against its outstanding invoices, without waiting months for payment.
Upon request, funds can be drawn flexibly according to cash flow requirements, and accessed within minutes.
Next, Asti was invited to submit a financing application in HSBC’s new Digital Receivables Finance platform. It had to review a pre-filled questionnaire and upload its accounting data; this data was then taken and assessed by the platform’s artificial intelligence system, as part of an internal credit assessment.
Within two days, the bank made an offer to the company on how much funding it could provide. Asti’s RF facility was activated in December 2022, and their first funding was drawn down in end-January.
For Balakrishnan, gone are the days of having to rush down to a bank to submit a stack of hard-copy forms. When his company wants to raise cash, all it needs to do is submit its invoices on HSBC’s electronic Receivables Finance (eRF) platform.
“Once we upload the invoice into the system, we receive cash immediately, instead of having to wait months for our clients’ payments,” he said. “It’s also more environmentally friendly, as everything is digital.” The platform affords Asti an overview of its RF facility, such as outstanding unpaid invoices submitted and the available funds that can be drawn down.
Besides providing just-in-time financing, the RF facility gives companies the option of saving on interests when borrowing is not required. This provides them with more control in managing their interest expenses amid a rising interest rate environment.
Asti’s gains have been substantial. Since activating its RF facility three months ago, Balakrishnan said the company now has the confidence to undertake more projects – for instance, it recently secured a big petrochemical project with an oil and gas firm.
The solution has helped the film reduce its reliance on more expensive overdraft facilities and business term loans, which are not always guaranteed, he added.
“With cash flow crunch, we’d always be wondering if we can cope with certain projects and would likely be more conservative about taking them up. But now that our cash flow has improved, our revenue from certain customers has doubled.”
Asti has also managed to improve its working relationship and negotiating terms with its suppliers, who are now paid on time. This has indirectly generated cost savings for the business, he said.
The company will be working on several of its own automation and digitalisation initiatives, as it seeks to make the move to Industry 4.0. This includes developing an internal cloud server to store all of its documents, which Balakrishnan says will be complementary to HSBC’s RF facility.