FINANCING for small suppliers can be a headache, especially when clients delay payments and cash flow becomes a problem.
Former investment banker Rajah Chaudhry would know.
After more than a decade in Hong Kong's banking sector, he has started his own businesses, first a financial data and analytics company based in mainland China, and then dabbling in other start-ups.
Frustrated with the lack of funding options for small companies, he turned his attention to providing a solution that would help such firms improve their cash flow.
In the middle of last year, he founded Paycelerate, which runs a platform that works like a marketplace for suppliers and the companies they serve; the platform helps suppliers to get paid ahead of time by offering discounts to the companies, which then benefit from better margins.
Paycelerate's dynamic discounting platform has gained some media attention in Hong Kong in the last year, and Mr Chaudhry is now looking to expand the company's reach to Singapore by the end of this year.
He told The Business Times: "Very few banks actually lend money to small companies… The reality is there are rules and regulations that make it almost impossible for small companies to get financed from banks.
He said that when he analysed the problem, he saw that small companies are in need of financing because they are ridden roughshod over by customers in the payment terms they need to offer.
Dynamic discounting offers a "win-win solution", he added.
"We work with corporates to try and get them to pay their bills earlier to smaller companies, in return for discounts from the smaller companies," he said.
"The cost of that for smaller companies is less than if they to go for a bank loan, and less complicated. For the corporates, they actually get a discount and better use of their working capital."
Paycelerate has taken off in Hong Kong. More than 30 suppliers use the company's platform, serving bigger corporates across the chemicals, garment manufacturing, trading and distribution and retail industries.
Paycelerate has grown its team, going from one full-time employee to 11 in Hong Kong. It plans to add up to five employees in a Singapore office later this year, and get a foot in Taiwan and Australia next year.
Mr Chaudhry said: "Hong Kong is where we were based, and is a very good market to test things, lots of very large corporates with their headquarters and senior management here. That accessibility to large corporates applies to Singapore to a certain extent, so it is a natural transition for us to go there.
"Small suppliers face similar problems throughout the Asia-Pacific region. Market entry is more about where can we get traction quicker, where systems are a little bit more advanced and people more willing to innovate, so certainly that's where we see Hong Kong and Singapore as good choices."