Globalization has further increased the opportunity for inter-regional growth in Asia- Pacific’s emerging regional markets. These flows are creating new trade channels in the region where they did not exist before. As supply chains continue to fragment and proliferate, so does the need to finance them. New suppliers and customers in markets in Asia-Pacific may be highly efficient in a manufacturing cost or profitability sense, but many lack working capital capacity to afford the credit and payment term terms of their counterparts. An increasing number of businesses within and outside the region are stretching to keep pace with market opportunities and extend their footprint in the region. Opportunities are there, but profiting from the growth is not easy. As companies are looking to fund and optimize their working capital optimally to leverage high-growth emerging markets in Asia, they are giving their financial supply chains special strategic consideration. In particular, the opportunity to expand into Asia-Pacific has greatly increased the need for working capital finance programs, particularly within industries that have wide-spread trade flows, like automotive, retail, and electronics. Working capital finance is a solution that helps companies maximize the efficiency of their working capital that is used in their day-to-day trading operations, calculated as current assets minus current liabilities. Working capital finance helps trading partners cut costs, generate cash flow, and efficiently address growth in scale and new demands from customers. Below are a few key points you should consider when setting up your program in the Asia-Pacific region:
- Choose an open independent platform provider which does not have any limitations in terms of jurisdictions or currencies and can be set up for domestic or cross-border programs in multiple languages.
- Look for a dedicated local expert team that assists you with onboarding your suppliers to the financing platform and helps you with program management and program support. Web-based platforms which support the onboarding process for your suppliers are also a great tool.
- Go for multibank funding. The flexibility to work with multiple funders or to use your own balance sheet (self-funding) is essential for your business in order to overcome bottlenecks and potential credit inefficiencies from singe banks.
Whether you are a buyer/importer or a supplier/exporter, working capital finance can help you boost your financial supply chain and achieve the next wave of working capital improvements, so you will feel more prepared to tackle the promise and peril of growth in the Asian trade powerhouse. To learn more about past and current markets in Asia-Pacific, growth opportunities, keys facts and trends, and why PrimeRevenue is the best choice for expanding into this region, please contact us today. A PrimeRevenue representative will answer all of your questions.
Published August 25, 2014