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Making business-to-business payments painless

How does the UOB Virtual Payment Solutions work?
How does the UOB Virtual Payment Solutions work? GRAPHICS: UOB

Cash flow is king when it comes to managing a business.  However, for many small businesses, delays in being paid can have an immediate impact on cash flow and the day-to-day management of operations.

Research conducted by the Singapore Commercial Credit Bureau found that more than two in five business-to-business payment transactions by local firms were delayed in 2016. These delays often lead to further delays to companies within the entire supply chain. 

To create more certainty in the payments and to help companies extend their cash flow, UOB has launched Southeast Asia’s first virtual accounts payable solution, the UOB Virtual Payment Solutions suite. The solution enables businesses to pay their vendors and suppliers through a virtual corporate credit card account - even if the receiver does not accept card payments. By doing so, the company making the purchase enjoys interest-free credit to help extend their cash flow for an additional 60 days without any impact to their supplier.

With the UOB Virtual Payment Solutions suite, companies are also less reliant on manual processing as the account reconciliation process is automated. Resources can then be redeployed to focus on other areas of business, helping companies raise their productivity while managing cost efficiently. 

NEC Asia Pacific (NEC APAC) is the first company in Southeast Asia to use the UOB Virtual Payment Solutions suite. It used to take them up to 60 days to process payments from when the invoices were received to the point when money was deposited into the payee’s bank.  Often, the payee was a small business, reliant on the payment to manage their cash flow.

Since using the UOB Virtual Payment Solutions suite, NEC APAC has shortened its overall processing time to fewer than seven days.  
NEC APAC’s finance team notes that human error is also minimised as the process is now largely automated. At the same time, their 18 suppliers, all of which are SMEs, benefit as they receive their payments faster which then makes it easier for them to manage their cash flow.

One of NEC’s customers, Mr Kuah Hock Chye, Director, GSK Construction and Engineering, even related a story that in the past, when they were paid by cheque, if a cheque was misplaced, his team would have to go through the hassle of asking NEC to cancel the missing cheque and reissue a new one. Mr Kuah says that since they started using the UOB Virtual Payment Solutions suite, no cheque is required, and the process of collecting payments is no longer manual and much easier. Plus, they receive their payments earlier, which they say is “always a good thing.”

As businesses grapple with subdued economic conditions, rising costs and a tight labour market, improvements in cash flow management can make a significant difference to the health of their business. In offering the UOB Virtual Payment solution, we hope to meet the need for a reliable payments solution for businesses navigating these challenging times.  

The author is Managing Director and Head of Personal Financial Services, Singapore, at UOB