You'd almost think that traditional lending has gone out of fashion. Renowned fashion label m)phosis is the latest company to sign up for a supply chain finance facility from ApexPeak to help grow its business regionally.
The facility, worth S$200,000, is one of a number of measures put into place by the retailer to sustain its growth during 2015 and to cope with the Chinese New Year shopping rush. A consolidation of their outlets and franchises in China has improved the company’s days working capital; however, to increase their market share, more cash is required to purchase additional stock for new ranges of women’s clothing. 'Supply chain finance is a smart solution for us as it frees up working capital.
Instead of a retailer like us paying suppliers, the alternative finance company pays the suppliers and we use the extra cash to fuel growth’, says Hensley Teh, Managing Director of m)phosis. The deal is the first of its kind for the retailer and represents an entrée into alternative finance. Supply chain finance (SCF) helps companies bridge the time they pay suppliers, to the time they receive cash from their customers.
Typically for the retail and textile industry, days working capital is 76 days. As commercial rents and shop fit-‐out costs rise in Singapore, efficiently managing working capital can offer a competitive advantage. M)phosis chose alternative finance to reduce its dependency on traditional lenders. The SCF facility was made available within just one month – perfect timing to catch the Chinese New Year shopping rush.
M)phosis are are considering extending the facility to cover more opportunities abroad. ‘While, comparatively, this is a small deal, this is just a start and over time we will see deals of upwards of 20 million as local businesses become more familiar with alternative finance’, says Michael Hyltoft, Head of Supply Chain Finance, ApexPeak.