Blockchain comes to SMEs’ rescue

Acudeen chair JJ Atencio and Acudeen Technologies founder and CEO Mario Jordan Fetalino III.

Blockchain—that much-talked about game changing technology mostly associated with the trading of cryptocurrencies—can now be used by small and medium enterprises (SMEs) to cash in receivables, improve their cash flow and fast track growth.

The first blockchain-powered invoice in the Philippines had been successfully posted and sold through Filipino-owned fintech Acudeen Technologies’ AssetChain ecosystem.

With this transaction, a logistics company obtained financing using blockchain.

Acudeen recently teamed up with Hong Kong-based digital logistics provider OpenPort to produce cheaper and more accessible financing for small businesses all over Asia. Soon after, one of OpenPort’s users uploaded a blockchain-enabled invoice amounting to P377,384 on the Acudeen platform. This was purchased at a highly competitive price within two hours.

Acudeen Technologies founder and CEO Mario Jordan Fetalino III said the invoice had been successfully verified without the need to interact with the sellers’ payor, opening up a new route to provide financing to various SMEs at a much faster pace than most solutions in the market today.

“It usually takes 21 hours on average to validate an invoice and verify a transaction and much longer for invoices with big amounts such as the one with an OpenPort client. With blockchain as the catalyst, within two hours, the invoice was sold and the seller was successfully funded. This proves that there is a pressing need for transparency and visibility in order for both financial institutions and individuals to provide more flexible financing options for SMEs,” Fetalino said.

Blockchain refers to a digitized and decentralized ledger that records all transactions in chronological order, providing central record keeping that can facilitate the exchange of assets—especially digital assets like bitcoin or etherium—without having to use the existing payments infrastructure powered by banks and traditional institutions.

The successful transaction using blockchain, Fetalino explained, proves that inclusivity is possible given openness of stakeholders to new ideas and new technology.

The AssetChain platform allows users to place movable assets such as inventory, trademark, warehouse receipts and other physical products on the marketplace. Using this system, entrepreneurs can liquefy their receivables ahead of maturity as they are matched with investors with excess money to lend out. The sellers typically accept a discount between 2-5 percent depending on the quality of the receivables.

The hyperledger fabric of Acudeen’s AssetChain provides transaction confidentiality. Using permissioned blockchain, data may only be shared to participants involved in the transaction, thereby protecting their sensitive information.

The partnership between Acudeen and OpenPort is seen to help create a better business environment for both SMEs and big corporations.

“The combination of the two businesses and the way they both adopted blockchain have proven with this transaction that inclusivity is possible given openness of stakeholders to new ideas and new technology,” Fetalino said.

The tie up is also seen to mitigate the risk for financial institutions as the transparency and visibility of the blockchain platform can help them come up with more informed decisions.

“Through blockchain, it made the acceptability of the invoice easier and faster since the blockchain trail made sure it was validated, verified and services or goods are rendered or delivered,” Acudeen chair Januario Jesus Atencio said .

Headquartered in Singapore, Acudeen was founded in 2016 to facilitate the rediscounting of receivables to help small businesses. Since its inception, the start up company had helped more than 700 SMEs.  For 2017 alone, it has helped SMEs raise funding against $3 million worth of receivables. In the first quarter of this year, the volume has reached $6 million.

To meet growing demand for its services, Acudeen is raising $35 million from the sale of tokens to investors through June this year.

“The purpose of our token sale is to accelerate more businesses with our services in the coming years through this revolutionary technology,” Atencio said.