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GOAL: To find out how licensed P2P platforms can help improve your organization’s aging report and safely achieve double-digit returns from your cash reserves by investing in your own supply chain
Wouldn’t it be nice, if your aging report or Days Sales Outstanding (DSO) is far below 30 days even if you deal with tenths of thousands of invoices and purchase orders every month from thousands of clients and B2B partners?
No, that is not a myth! Not unless you think Nestle Malaysia and companies like them aren’t real.
What about earning double-digit returns on your company’s idle cash reserves without putting those capital any more at risk compared to the current 2.5% you received from FD or money market funds?
No, that too is not a myth, unless you think local giants like Samling and Sunway groups got to where they are purely by luck and zero strategies..
Nestle Malaysia had an interesting tie-up with Maybank over 10 years ago about a distribution card program.
When you stock-up Malaysia’s favorite Milo, Maggie, and Nestum at your supermarket’s shelves, Nestle requires you (and most retail distributors) to use an American Express charge-card issued by Maybank to pay for the supplies. Therefore, in Nestle’s book, this transaction is either paid instantly or will be paid in just a couple of days instead of weeks via those charge cards, and You now owe Maybank the payments instead of to Nestle.
Maybank gets to have you as their client and Nestle Malaysia gets to show off their beautiful aging report and let someone else (this case, Maybank) worry about invoice collection – genius!
If you think that was genius, then you’d be at least equally impressed with what our second example Sunway group did to generate safe and very healthy profits from their cash reserves financing thousands of their own B2B partners.
For this second example, assume both you, the construction materials supplier and your client XYZ Sdn Bhd are part of the Sunway group.
You sent blocks of cement to your client XYZ Sdn Bhd and invoice them for MYR1,000,000. The term is 30 days but you know you are not going to see that for at least another 60 to 90 days, so what do you do when you are dire need of MYR850,000 by next week? You go to Sunway Credit!
Well, my friend, nothing is free except Oxygen. Sunway credit needs to get paid for those services.
The 10K charge is just to illustrate the point. The usual charge is nearer to 1% a month of the total sum advanced. That’s about 10% – 12% profit a year. A heck of a lot better than those 2.5% – 2.8% from the FD and money market funds wouldn’t you agree?
You gave me 100 bucks and i pay you back 103 at the end of the year – about 3%. But what i really did was, use the money you gave me to lend it to your uncles, sisters, and cousins for 18% a year. Why not you charge your own relatives 10%?
IF Sunway kept their millions in FD and money market funds, they are basically allowing the banks to make 8 to 18 percent profit a year by lending those same millions to their own B2B partners while giving them(Sunway) back less than 3% in yearly interest. By running this program, Sunway basically said “screw you” to the bankers. I will fund my own supply chain and make that money myself.
The answer would be to use an Independent debt crowdfunding platform. Please fill-up the form to register your interest and learn how you can do just that.