Supply chain shocks have been a hot topic throughout the pandemic. One area we see opportunities to make improvements is supply chain finance, which helps suppliers and manufacturers optimize working capital.
The COVID-19 pandemic has increased the use of supply chain financing, but there’s still significant untapped value in this market globally. Digital platforms and fintech innovations can help unlock that potential. That’s why we’re proud to support BSOS, a company creating enterprise-level fintech solutions for supply chain finance by leveraging blockchain.
The Nuts & Bolts
Problem: Broadly speaking, supply chain finance helps suppliers receive faster payments and allows corporate buyers to defer bills and free up working capital. Traditionally, a buyer purchasing goods has a fixed period to pay, but cash-strapped suppliers can seek quicker turnaround by turning to a financial institution to arrange faster payment. Buyers can then defer payment even longer, while suppliers can access cheap funding, with the financing cost based on a buyer’s credit rating.
Supply chain finance is growing in popularity, but the market suffers from complexity and outdated practices: nearly 80% of eligible assets don’t benefit from better working capital financing, with the remainder often financed inefficiently. Supply chain finance also often focuses on larger, multinational corporations, while smaller enterprises can face accessibility barriers.
Traditional supply chain finance involves multiple parties, providers, identities, certifications and communications. Many processes are often performed manually or with little automation, while data sharing remains fragmented. For instance, financial institutions can be slow to verify authenticity of account receivables and make credit decisions. Simultaneously, financial institutions in emerging economies can find it challenging to offer supply chain finance products, in part due to a lack of technological capacity.
But digital tools, fintech and blockchain can offer opportunities to make improvements. Automation is a key trend here, however many solutions only tackle small parts of the process. For instance, some existing services match SME suppliers to financial institutions, but don’t provide an entire end-to-end solution.
Solution: BSOS is building an entire digital supply chain finance ecosystem that brings together suppliers, buyers and financial institutions on one platform. It’s doing that through its SaaS platform SUPLEX, a supply chain finance marketplace for enterprises built around blockchain and decentralized finance (DeFI).
SUPLEX is designed to deliver better asset liquidity and efficient financing by connecting buyers, sellers and capital providers with the tools needed to simplify and automate processes. Blockchain can offer the ideal technology to achieve this and authenticate assets quickly, thanks to its decentralized and immutable nature, which makes identifying, tracking and auditing all involved parties a more efficient and error-free process.
Built with Enterprise Ethereum, SUPLEX records account receivables and transactions in the format of digital assets and provides API integration into bank systems. It allows suppliers to easily invoice financing digitally, while buyers get more transparent information about vendors and can monitor the health of supply chains. For financial institutions, SUPLEX can speed up deal sourcing, credit checks and the internal approval process. The result is a diversified and flexible working capital solution able to serve enterprises across numerous industries, from semiconductor manufacturers to green energy companies.
Getting to know BSOS
Launched in 2018 in Taiwan, BSOS was founded by a team combining backgrounds in tech and finance. CEO and cofounder Daniel Huang is an engineer who has worked on product development and design for over 10 years. He’s also a second time founder, having previously launched OneTalk Messenger. Cofounder and CMO Wayne Ke has worked in the financial industry for more than a decade, which includes time spent as a VP at CITIC International Asset Management and before that as an associate director at UBS.
Why now?
We believe BSOS is positioned to serve a sizable market for supply chain finance solutions, particularly in manufacturing hubs in Asia. Supply chain financing had already been growing in recent years and the pandemic provided a boost, with the market reaching a total value of $1.3 trillion in 2020. Supply chain finance has grown to surpass traditional trade finance in market revenue. The global market for accounts receivable automation was estimated at $1.9 billion in 2020 and is projected to reach a size of $3.8 billion by 2027.
We see room for new supply chain finance products to rise across key markets globally. Already BSOS can find opportunity in its home market, as Taiwan is an important manufacturing hub.
The future of BSOS
From its home base in Taiwan, BSOS is focused on expanding its supply chain finance ecosystem by developing its network of industry stakeholders. The company already has large corporate buyers using SUPLEX, including publicly listed firms in Taiwan, and it has inked partnerships with local financial institutions.
In a world where the pandemic has reshaped supply chains, we look forward to helping BSOS create next generation products for supply chain finance.
You can learn more about BSOS at: https://www.bsos.tech/
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