Despite the heavy contribution by SMEs to local economies, many of them struggle to access financing to obtain working capital for their survival and growth. In South-East Asia, this barrier can be attributed to the complex application process by banks, which asks SMEs for information they won’t have. Paired with heavy interest and processing fees, it’s an uphill battle for small businesses. Recognizing their struggle, Flex aims to help SMEs meet their working capital requirements and simplify their daily financial operations. Since its launch a year ago, the company has grown rapidly and now supports several companies in Singapore. In conversation with Arteculate, Co-Founder and CEO of Flex, Dr. Sian Wee Tan, shared how the company is working towards creating a level playing field for SME financial services in Asia.
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What is Flex and how does it help SMEs?
“We are a financial institution first and foremost, backed by the best technology rather than the other way around,” says Dr. Tan as he introduces Flex. The company works towards helping SMEs and startups grow by addressing their most pressing needs. It does so through its two products—Flex PLUS and Flex Visa Business Cards.
On-demand flexible working capital with Flex Plus
Flex PLUS offers companies a flexible on-demand line of credit. It starts at S$5,000 within 24 hours and scales up to S$500,000 approved within 48 hours. While increasing in parallel to the amount, the company’s use of technology has allowed it to keep documentation requirements at all levels to a minimum. Through Flex PLUS, SMEs and startups of various sizes have an accessible source of credit that meets their different needs to fuel their growth.
Physical and virtual cards with Flex Visa Business Cards
Meanwhile, Flex Visa Business Cards are designed to help companies gain control over their spending. These can be either physical or virtual cards. Further, with the company having a license as an issuer of Visa cards, they can offer unparalleled flexibility. Each card can be assigned with spending limits and assigned particular categories of expenses. So, for example, a Flex Visa Business Card given for transportation can be used for public transport but not at a restaurant.
A spend management system for SMEs
The unparalleled level of control at the merchant category level by Flex Visa Business Cards is the first in Singapore. These settings can be set on Flex’s spend management platform, which SMEs can utilize to manage their expenses efficiently. In addition, users can upload receipts to the system for better expense management. Transactions made on a Flex Visa Business Card seamlessly integrate with cloud accounting platforms such as Xero. With this combination of features, SMEs can reduce manual work and speed up reconciliation. Thus, they exponentially improve their finance teams’ productivity with Flex’s spend management platform.
Understanding the struggles faced by SMEs
It’s understood that one of the most burning challenges faced by SMEs is poor access to finance. Flex spoke to over 2,000 SMEs in Singapore and Vietnam to better understand the issue. Sharing the findings from this research, Dr. Tan said, “We define working capital as the money needed for their daily operations, which is typically for no more than 60 days. The problem small businesses face in accessing a short-term financing facility is the long and complex application process.”
The process has several roadblocks because of regulatory constraints banks have to follow. Additionally, since the 2008 financial crisis, most institutions have adopted a conservative approach to lending. But another reason Dr. Tan identified is that existing processes in banking aren’t designed for small businesses. He explains, “Banks can focus on SMEs, which involves thousands of relatively small deals around $50,000 – $100,000. Alternatively, they optimize themselves for fewer but larger deals, say $10 million. Yet, the workforce requirement for both deals is the same. Hence, to serve thousands of SMEs, a bank needs a high degree of automation.” This gap is where fintechs like Flex, with a solid financial background and technology foundation, can meet the evolving needs of SMEs.
Describing how the needs of businesses evolve as they grow, Dr. Tan shared, “Startups are focused on survival. They have lean budgets and are underserved by banks. Once they have a proven revenue model, they begin expanding into new markets. Here they’ll struggle with establishing processes and managing expenses. Finally, once established as a market leader, they’ll spend millions of dollars maintaining their market position. So it’s essential to have real-time visibility on company-wide expenses and deal with operational complexities.” With this strong understanding of the evolving challenges businesses face as they grow, Flex has built a strong product portfolio to support them at every stage of their journey.
Digitization to support SME ecosystems
Across the world, digitization continues to unlock new opportunities in several industries. Seeing these trends unfold, Flex is committed to a platform-based approach using APIs to connect and empower the ecosystems of SMEs. Dr. Tan pointed out that eCommerce websites and B2B suppliers work with several SMEs. However, there remains significant room for improvement regarding reconciliation between the different parties.
“If you take an online travel agency, most people will come to their website and purchase a hotel room. The agency will batch these individual bookings and settle them at the end of the day. Typically, this settlement will be done either as a bank transfer or with a credit card. But what if a customer requests a refund? From an accountant’s perspective, earlier, they made one payment but for 20 bookings. When something goes wrong, then it’s tough to reconcile the books, especially if there’s much movement. But with APIs, we can simplify the process and make reconciliation easier for everyone,” illustrates Dr. Tan.
With its existing product portfolio consisting of Flex PLUS and Flex Visa Business Cards, the company has begun addressing some of the biggest challenges faced by SMEs. The company has eliminated old roadblocks for businesses to meet their working capital requirements while also helping control their spending and improve their productivity. Having witnessed the trends of digitization and the opportunities it unlocked, particularly in eCommerce, the company is committed to capitalizing on them to better support SMEs. Dr. Tan sums up this vision by stating, “We are looking forward to working with all of our partners in the eCommerce space and elsewhere to help them grow and realize their full potential.”
