Local construction company Kimly had long been suffocating under an avalanche of paper. Projects would create massive amounts of data, transactions and records.
The game changed significantly when it worked with a digital platform and its bankers UOB. Now, the company is not only paper light, but its processes have been tightened considerably.
“A single project can generate hundreds of transactions in a single month,” says Mr Louis Khoo, director of Kimly Construction, “spanning paperwork that covers procurement, payment, certification, and so on.
“We have to work with suppliers that deliver to multiple construction sites, as well as subcontractors on various kinds of trades. Individually, they will have different credit and payment terms, while some suppliers have their own customer portals.
“For just one construction project, there can be up to 1,000 transactions.”
Managing the bulk of information is crucial because poor or missing data can lead to bad decisions, project delays and financial risks.
Kimly, a private company founded in 1965, had been looking to digitalise manual paperwork and trade financing processes for several years before they were approached by local fintech company Doxa in 2019, a start-up that was incorporated in the same year.
“Doxa offered us their online procurement-to-pay platform Doxa Connex, which can help us to automate these complex workflows. The app was in its pre-launch phase back then, and Kimly worked closely with Doxa on refining its features for construction processes,” says Mr Khoo, 35.
In August, a memorandum of understanding was signed between Kimly, UOB and Doxa to pilot their first green trade and sustainable transaction using Doxa’s platform, with a financing module co-created with UOB.
Doxa Connex helps construction companies to digitalise their workflow and payment processes between suppliers and buyers. These include the creation of invoices, uploading and validation of supporting documents including purchase orders (POs) and progress claims.
With Doxa Connex, Kimly was able to save about 30 per cent of man hours in payment processing for its suppliers and subcontractors. “With all the documents now on the platform, Kimly and our suppliers are able to manage our business processes with greater efficiency,” says Mr Khoo.
Leveraging the existing digital data available on Doxa Connex, Kimly can also access green and sustainable trade financing from UOB bank without additional paper documents. Mr Edmund Ng, Doxa’s co-founder and chief executive officer, shares that the platform makes use of blockchain technology to help verify documents. “This way, Doxa Connex provides financial institutions with a single source of data truth and greater transparency.”
For example, once a PO is generated, the data will be encrypted in the blockchain and become part of an immutable database, which means it cannot change, be changed, or deleted.
“There is no way for anyone to delete or manipulate the data that’s already in the blockchain, and this makes it easy to prove that the transaction in question is genuine,” says Mr Ng, 46.
Construction companies will be able to validate their suppliers’ or subcontractors’ invoices on Doxa Connex, and its trade financing requests will be automatically triggered and forwarded to UOB. This cuts the need for the company to send physical copies of the relevant documents to UOB branches for verification.
Ms Ng Poh Yee, UOB’s managing director and head of Corporate Trade Sales and Financial Supply Chain Management, adds: “From a financing standpoint, we need the same evidences of order, delivery and acceptance of the underlying commercial contract between our client and their suppliers.”
Before it was digitalised, clients would have to collate and submit these documents from various internal and external parties to UOB for verification. The bank also requires a copy of the same documents.
“This duplication means the paper flow is actually doubled as UOB would have had to separately and individually verify the authenticity of each transaction, which adds to the processing time to avail the financing required,” says Ms Ng, 50.
“But with Doxa Connex, we no longer have to do so as our client can easily push the relevant supporting trade documents digitally to us for financing, making the process secure, swift, and cost effective.”
When it comes to financing in the construction industry, suppliers, contractors and subcontractors are often inadequately served, says Ms Ng.
“Especially for green and sustainable trade finance, most of them lack the necessary framework to prove that they meet certain sustainability standards. They may also not be fully aware of the financing options available to them,” she says.
The use of a single source of truth in Doxa Connex to verify supporting documents addresses this issue, allowing UOB to finance not just Kimly, but also all the stakeholders along Kimly’s value chain.
With sustainability being a key focus for UOB Group, the bank launched its Green and Sustainable Trade Finance Framework last year. It was designed to provide businesses with a clear guide on assessing eligible green activities and recognised industry certifications within targeted sectors.
Ms Ng says that simplification is critical as it lowers the barrier to entry and helps SMEs and lower-tier contractors gain access to green financing options, allowing them to partake in a wider sustainability adoption drive.
For example, Kimly’s latest green project, the construction of the Singapore Institute of Technology’s campus at Punggol North, was certified to receive green and sustainable trade financing under the framework. The subcontractors and suppliers involved would also be eligible for the sustainable trade financing as well.
Ms Ng adds: “What is being created is an ecosystem of connectivity that brings together the entire value chain spanning suppliers, contractors and developers, so that UOB can extend our financing to benefit more SMEs.”
The environmental, social and governance agenda has become a growing strategic priority amongst both large corporations and SMEs in the region, according to UOB’s 2022 Asean SME Transformation Study.
Concluded earlier this year, the study captures the sentiments of 1,500 SMEs across five key Asean markets – Singapore, Indonesia, Malaysia, Thailand, and Vietnam. In the study, two out of three SMEs (65 per cent) indicated that sustainability is important.
Moving forward, UOB is working on a “data super-highway infrastructure” to further the digitalisation of green trade finance.
“We want to bring ecosystem system players even closer together by connecting the relevant certification bodies to the platform as well – so that even the verification of the Building and Construction Authority’s Green Mark certifications can be digitalised,” she says.
“That way, we can truly go from paper light, to paper free.”
The Future of Finance series explores how digital solutions and insights can empower individuals and businesses in a rapidly changing world, to create a more sustainable future.
This article was originally published on The Straits Times and was written by Kareyst Lin, Content STudio.
Source: The Straits Times © SPH Media Limited. Permission required for reproduction
