Keppel TatLee Finance offers e-factoring for SMEs

Singapore''s Keppel TatLee Finance targets the small and medium enterprise market with its first business-to-business offering.

Singapore-based Keppel TatLee Finance (KTF) will target the small and medium enterprise (SME) market with its first business-to-business (B2B) online offering - e-factoring. Cash-strapped SMEs will be able to raise working capital by assigning its accounts receivable to the bank, online.

KTF will be rolling out the service in three stages. Firstly, customers will be able to make enquiries and receive replies as to the status of their credit lines online. KTF will also respond to enquires via short messages sent to customers on their mobile phone or pager. In the next stage, customers will be able to use the internet-based software to increase or re-allocate their credit limits. In the final stage customers will be able to submit their accounts receivable via the internet and link their back office to the service.

KTF has been running training seminars on the new system with 30 KTF customers. So far, the response has been encouraging says, Chee Jin Kiong, managing director of KTF, although "We have to spend quite a bit of effort on education," he admits. "This is new to most SMEs … and some are still concerned about the security aspect of the internet."

But Chee points out that KTF has engaged PricewaterhouseCoopers, an independent risk assessor, to look at the system, "which is not required by any rules or regulations in Singapore". The e-factoring system was developed by S&I System and runs on IBM's AS/400 server.

Cost savings

From the bank's point of view, Chee says that this service will save on manpower costs, as less staff are needed to service the existing call centre. E-factoring also allows the bank to manage risk more closely, through a better understanding of  the client's receivables books, and real-time tracking of credit bills. "E-factoring gives us a chance to find out from our clients why, for example, out of $1 million they only factor $400,000, which will make us think about our pricing. It enables us to know our client's cash flow better," says Chee.

Where clients do not have the hardware for the service, KTF will also provide a 3 year financing scheme for the purchase of appropriate computer hardware.

As for future internet-based services, KTF plans to target the car financing market with e-factoring. On the retail side, customers with fixed deposits with the bank will be able to check the status of their investments and re-deposit their money online. Full retail e-banking service plans, however, will not be rolled out until much later, as Chee says that the e-banking guidelines issued by the Monetary Authority of Singapore are general in nature and do not specify all the details.