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

Shenzhen, 28 August 2020– United Overseas Bank China and Lenovo Group received the award for The Best Financial Supply Chain Management in China for 2020 at The Asian Banker - The Bankers’ Choice Awards. The awards ceremony was held in conjunction with the prestigious Finance China 2020, the leading annual conference that brings together financial institutions, regulators, policy makers, economists and services providers to meet and share professional insights, work on detailed solutions and discuss the latest trends in the industry.

 

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.