FOR small and medium enterprises (SMEs), trade financing can be one of the toughest and most complex forms of financing around - especially for emerging enterprises. Coping with the demands and stress of securing the finance required to sustain growth can be all too much for a small firm to bear.
But fortunately for BID Trading, which wholesales, imports and exports baby products, financing has been relatively easy to cope with. And as a result, the firm is prospering, carrying leading stroller brands like Maclaren.
Since 2002, BID Trading has been expanding into the Philippines and China, where growth is surging by as much as 200 per cent.
Behind the company's success is its relationship with its primary banker OCBC that stretches back to 1997. When BID first acquired a unit at Kaki Bukit, it needed a 90 per cent loan because it was cash-strapped at the time. And that was where OCBC came into the picture.
BID general manager Samuel Goh says: 'I had some properties in Malaysia, too, and dealt with Malaysian banks. Their interest rate is higher and they are slower in doing business. OCBC is much faster and more flexible in doing business.'
Receiving financial support from a banker that understands the needs of SMEs was crucial to BID's progress over the years.
'Every year we increase trade facilities because our business grows. On average, we have grown 30 per cent each year since 1997,' says Mr Goh.
'Sometimes our credit limit is full, but OCBC has been very flexible in increasing our limit for us,' he says, explaining how the bank's understanding and flexibility has helped BID boost its growth.
The bank's efficiency in dealing with financing requirements is also a plus point. Mr Goh told BT that when applying for letters of credit (LCs), the process is fast and hassle-free. 'We just need to fax over our forms, and within two or three hours they will approve our application.'
Engaging clients
Customer service, too, plays a big part in developing a good relationship with a bank, says Mr Goh. Besides focusing on more mature SMEs, OCBC has a team of relationship managers dedicated to servicing the needs of small emerging enterprises.
Customer engagement is also important to the bank, which organises activities for clients such as annual Chinese New Year dinner and gives them complimentary movie tickets.
To give SME customers faster turnaround time and greater efficiency, OCBC recently launched a new trade finance programme called OCBC Business Trademax. It is tailored to meet the working capital and trade needs of local companies in the wholesale manufacturing and trading sectors.
Trade facilities bundled with secured overdraft facilities are offered under the programme, including LCs, trust receipts, shipping guarantees, draft loans, standby LCs and banker's guarantees.
BID recently applied for Trademax to increase its credit line and benefit from even faster turnaround time. Benefits and trade facilities that customers like BID receive include a high quantum of financing (up to 10 times or $3 million), fast 48-hour approval, and same-day issuance of LCs, shipping guarantees, export negotiations and export collections, provided applications are submitted before respective cut-off times.
To ease the application process for small companies, qualifying conditions and document requirements have been simplified, enhancing the end-to-end customer experience.
This article was first published in The Business Times on Jun 10, 2008
