How TBXONE support Bank Negara Indonesia

Bank Negara Indonesia or BNI, is the third-largest state owned enterprise and publicly listed bank in Indonesia. BNI was the first wholly-owned state bank, and is the fourth largest bank in Indonesia, with total assets of IDR 388.2 trillion and 26,100 employees. Currently BNI has more than 1,700 outlets across the archipelago and services 14 million customers, plus 6 overseas offices in Singapore, Hong Kong, Tokyo, Osaka, London, and New York; more than 1,600 correspondent banks in 104 countries; and 13,370 ATMs throughout Indonesia. BNI also serves its customers through 42,000 EDC’s, as well as through Internet banking and SMS banking. Its 10 subsidiaries support the provision of one-stop financial services, including banking products, insurance, financing, capital, and remittances.
TBXONE’s FSCM platform has been implemented successfully, starting with a client manufacturing bicycles. The financial supply chain management (FSCM) module used was at that time receivables financing, to accommodate the manufacturer in financing receivables for approximately 150 days. After this successful implementation, other FSCM modules were implemented in payables and receivables financing.
Implementation overview:
Client: Bank Negara Indonesia Tbk.
Industry sector: Banking
Challenge: Transition of traditional finance into FSCM
Solution: BNI chose to implement the TBX FSCM (Terbit-Business-eXchange Financial Supply Chain Management) platform, providing receivables, payables, and distributor financing to BNI clients.
Result: With TBX FSCM, BNI transformed traditional trade loans into transaction-based financing, injecting liquidity to its clients’ supply chains and thus optimizing working capital in the chain.


Case Study
Before implementing TBX FSCM, BNI clients used manual, paper based requesting and approval processes to provide trade financing on receivables. Implementation from credit approval to implementation was decentralized and took 3 to 5 working days to process before clients could receive their financing. A bank wishing to increase its trade financing needed to increase the workforce in the trade financing department.
In July 2013, BNI decide to do a proof-of-concept with one of its customers, a manufacturer of bicycles, to replace traditional trade finance processes they were using with TBXONE FSCM solution. Implementation was completed in 1 month; the client was able to speed up its financing from three to five days to a couple of hours! This receivables financing is a working capital facility and books as loans on the client’s balance sheet. This was a start on implementing additional FSCM modules such as payables and distributor financing.

The receivables financing functionalities implemented for the client:

  • Web based TBX FSCM platform
  • Upload qualified and irrevocable invoices by client
  • Dual approval process by maker and releaser
  • Receivables payment agreement and promissory note created with every financing request
  • Bank payment obligation (BPO) preparation to BNI cash management
  • Early BPO preparation to BNI cash management

Loan facility management.The next module implemented was payables financing, SCF or reverse factoring. With SCF, the (large) buyer sets up the program and enables its smaller suppliers to gain attractive funding terms based on the buyer’s superior creditworthiness. This means the supplier is paid earlier at a discount, while the buyer typically extends the payment date or gets a rebate of the invoice. The bank funds the program and receives a spread without much risk, since the creditworthy buyer backs the invoices.
The strategic goals of SCF transactions differ by industry sector within the overall goal of helping small and medium businesses (SMB) improve working capital. The industry strategic goals for SCF include:

  1. Retail–provide liquidity to maintain retailer growth in emerging markets
  2. Agriculture–provide cash-flow to micro and small businesses to invest in fertilizers and produce more crops
  3. Infrastructure–with early payments, construction is delivered on-time or with reduced delays
  4. Telecommunications–projects are delivered on time
  5. Overall—by injecting liquidity to the supply chain, micro, small, and medium businesses keep their buyers’ business moving.

The most common functionalities used in SCF:

  • Invoice upload and manual or automated nomination
  • Manual or auto financing request and release
  • Not a “loan” to suppliers and buyers (depending on auditors and BASEL and IFRS)
  • Flexible buyer terms of payment extension
  • Pay bank with rebate on invoice due
  • Loan to suppliers in cases of buyer hindered by legal lending limit
  • Multiple approvals on value
  • Bank payment obligation (BPO) preparation to BNI cash management
  • Early BPO preparation to BNI cash management
  • Loan facility management
  • E-receivable payment agreement on every early payment request.

Distributor financing can accelerate sales and supplier growth and be seen as a competitive edge. Distributor financing is a supplier-led model where the strong suppliers initiate and support banks on the loan facility to their distributors. Normally the strong suppliers support the bank with a bank guarantee, insurance on default, and repossession of goods. Distributor financing is a loan on the distributor balance sheet and underlying assets are the goods stated on the receivables.
The strategic distribution financing differ by industry sector, but all help the small and medium distributors to improve working capital. Both in periods of economic growth and during stagnation, market distributor financing can play a major role in securing suppliers’ supply chain sales demand and temporary inventory financing.

The following are strategic goals of distributor financing in selected industries:

  1. Branded electronics: push and safeguard brand
  2. Automotive: new tire brands enter emerging markets to get market share
  3. Beverage: accelerate sales to meet demands of economic growth.

Functionalities used in distributor financing:

  • Invoice upload and manual or automated nomination
  • Manual or auto financing request and release
  • Loan to distributors with underlying bank guarantee and insurance
  • Flexible late payment extension to a maximum 120 days
  • Bank payment obligation (BPO) preparation to BNI cash management
  • Early BPO preparation to BNI cash management
  • Loan facility management.

BNI benefits from transitional change of trade financing to FSCM:

  1. Efficiency gain and higher margins shifting from manual to automated processes
  2. Transition from project trade financing to transaction-based financing
  3. Increased float
  4. Cross selling on principal supply chain.

Implementation specifications:

  • Platform: TBX FSCM
  • Business model: SaaS, software-as-a-service with full support levels 1,2,3
  • Integration: SFTP, WebDav
  • Format: SWIFT MT100 and CSV
  • GO-LIVE: 2 clients per month
  • Users: more than 1,000
  • Transactions; revolving more than USD 1 billion on 90 days tenor average.

Further support BNI with onboarding its change management program in all departments. See the Onboarding case study: BNI transitional change management.

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