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PETALING JAYA: Homegrown Qu Exchange, an app that brings back the barter system of yesteryears, is aimed at bridging the financing gap and easing financial cash flow faced by small and medium enterprises (SMEs).
The app enables SMEs to pledge their products/services in exchange for other desired products/services.
In a recent interview with SunBiz, its founder Wayne Lim said the financing gap for SMEs has been widening in recent years due to lack of funding sources. The business environment is getting even tougher as delayed payment is generally a common issue faced by businesses.
Last year, Bank Negara Malaysia said there was a RM21.8 billion gap in financing for SMEs.
“Since we can’t find more money to help the SMEs, why don’t we just look at their collection problem…Businesses only get paid three months after they provide the services. This is why they need funding,” he said.
This gave birth to Qu Exchange last September, and the platform went live a month later. The word “Qu” is derived from a Mandarin character which means take/obtain.
Currently, a total of 1,700 companies across various industries have registered with the platform with outstanding products/services worth of RM140 million. Since its launch, some RM3 million worth of products/services have been transacted.
SMEs can secure instant trade points, known as “Qu points” by pledging their own products or services on the platform. The points are transferable but no cash-out is allowed to avoid companies taking advantages from point trading.
“We don’t want speculation, we only want these points to be used by the SMEs to buy and supply products and services to each other.
As most businesses would have excess in products and services, he said the platform will provide a good opportunity for them to look for more potential customers. However, products/services that are too “niche” will not be accepted given the difficulty to secure buyers.
The maximum amount of products/services that can be pledged is 10% of annual turnover. A company can only start a second pledge if it delivers the products/services during the first pledge.
Credit checks on participants are conducted together with RAM Credit Information Sdn Bhd (RAMCI), according to Lim, who revealed that the approval rate is almost 100% thus far.
“Our job is not to make the application more stringent, but to ease the difficulty of doing business.”
The exchange does not charge any transaction fee, but a 3% one-off facilitating fee does apply to the first pledge. Of the 3% facilitating fee charged, 1% will be retained as reserves in the event of defaults.
The exchange will be audited by Deloitte to ensure that each point is backed by an equal amount of products and services pledged. The company is also in talks with a few insurers to insure the Qu points.
Looking ahead, the company is looking to expand into the Asean, China and Hong Kong markets in the near future.
Lim said the initial investment cost for Qu Exchange is RM2.5 million and an additional RM10 million is needed for its expansion plan as well as the advancement of technology going forward.
The company is targeting to have 10% of the SMEs in the region registered with Qu Exchange within the next five years.
“There are one million SMEs in Malaysia and the target translates into RM100,000 customers from Malaysia alone.”
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