United Overseas Bank China recognised for implementing a customised Account Receivable Financing Solution for Lenovo Group’s suppliers as it wins Best Financial Supply Chain Management in China at The Asian Banker - Bankers’ Choice Awards 2020
- Solving manifold financial needs of Lenovo Group’s suppliers
Implementing a customised Account Receivables (AR) Finance solution to Lenovo’ssuppliers at with recourse basis
- UOB China’s solution brings key value propositions to both client and its suppliers
Solving manifold financial needs of Lenovo Group’s suppliers
Given that Lenovo’s suppliers are predominantly privately owned enterprises (POEs) with weak credit histories, they faced relatively higher financing costs and interrupted cash flows vis-à-vis market. This essentially distorted their working capital position and access to traditional funding channels, impacting the relationship of the suppliers with the anchor buyer. The anchor buyer, which is the subsidiary of Lenovo Group, was also looking to provide preferential and competitive financing terms to its group of suppliers, without taking on their operational risk on its balance sheet.
Implementing a customised Account Receivables (AR) Finance solution to Lenovo’s suppliers at with recourse basis
Leveraging on anchor buyer’s good credit-worthiness and business reputation, UOB China provided a customized Account Receivable (AR) financing solution to the suppliers. The bank purchases ARs from the suppliers at with recourse basis in a set up where the anchor buyer acknowledges and confirms the receipt of ARs to the bank at each transaction level. This allows the bank to take on the anchor buyer’s risk, leaving no impact anchor buyer’s balance sheet. The recourse structure further allows the bank to mitigate any suppliers’ operational risks as the bank only engages itself in financing of post shipment ARs. A centralised program team was further set up to manage Lenovo’s anchors/suppliers across the country/region. With queries routed to the main headquarters, it saves efforts on the part of different suppliers to liaise with different branches when applying for credit limits.
UOB China’s solution brings key value propositions to both client and its suppliers
The integrated Accounts Receivable Purchase (ARP) with recourse supply chain finance solution helps the suppliers with better cash flow management with a preferential financing cost. With a strengthened relationship and connections with the key suppliers from cost preferential supplier financing solution, Lenovo is able to streamline its procurement channel and explore greater business opportunities as well as access a wider network of both onshore and offshore suppliers. The suppliers are able to improve their working capital position with a 100-200 bps lower financing cost relative to other channels, which allows them to improve their cash flow positions significantly.
About The Bankers’ Choice Awards
The Bankers’ Choice Awards 2020, refereed by prominent global bankers, IT consultants and academics, is the most prestigious of its kind in Asia Pacific which recognise corporations that have strong financials and demonstrate the ability to use the financial supply chain to add value to their partners in the upstream and downstream activities of their businesses. Recipients of these awards are honoured in a gala event to recognise their efforts in bringing superior products and services to customers. A stringent and comprehensive evaluation process determines the awardees. For specific details relating to description of the awards, evaluation criteria and process, kindly visit http://www.asianbankerawards.com/bankers-choice/index.php
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