Pilon works to address gaps in businesses’ cash flow

Imagine a platform that enables immediate payment for suppliers and extended terms for buyers.

Businesses know “cash is king” and Singaporean-owned startup, Pilon, believes that “cash flow is queen” and just as important for businesses. In a time when firms find solutions to streamline their supply chains, Pilon Co-founder and CEO Eddie Lee’s company thought of offering a platform that optimises cash flow for both suppliers and buyers.  

Through their app, Pilon Plus, suppliers now get an overview of their invoices’ on the mobile dashboard and no longer need to call their buyers’ finance team to enquire about their owned payment.

The summary of total due payments in the next 30, 60, or 90 days are intuitively shown and the supplier can choose which invoice they want to get paid earlier or to get paid immediately.

When requested by the suppliers, Pilon facilitates the early payments to them while the buyers pay Pilon on the invoice due date. This will eliminate the need for the supplier to chase for payment from the buyer and free up the finance team from the buyer on enquiries calls. This in return improves efficiency on both sides of the operations.

Lee also revealed that they earn by getting a small percentage fee of the invoice value whenever a supplier requests early repayment.

“[Suppliers] have a snapshot of the invoices of their financial health on a mobile app, when they work with this particular buyer,” Lee told the Singapore Business Review.  

Cash flow solutions 

Supply chain financing is not the only service of Pilon. Lee said they are also operating “Recharge,” a mobile app that allows employees to get their salaries in advance.

He called the process “earned wage access,” which means instead of waiting for their full salary to arrive on the 15th or 30th of the month, employees can use the Recharge app to draw down the salary they have already earned. For example, $250 (US$190) after working for seven days. 

This is different from debt because the money is a portion of an employee’s salary that they have already made and is requesting for it to be paid before their payday.  

“The human resources team cannot process your pay on an everyday basis, because it will be too much work for them. That’s why they do it every two weeks or in some companies one month. But with Recharge, we allow the companies to enable their staff to draw down from their already made salary, as and when they want to.” said Lee.

How it started

Seven years ago, Lee and his partner, Alex Chua, thought of combining their expertise in finance and technology to start the company. Chua, Co-founder of Pilon, already has been operating a financing team specialising in invoice financing and is one of the largest non-bank service providers in this industry.

To expand their network, their common friend, Jojo Malolos, whom they met in Cambodia, helped the duo secure an opportunity to showcase their solution to a Philippines conglomerate who are looking to reduce the cash conversion cycle for their suppliers.

When they finally rolled out their solution in the Philippines, that was when they coined the name Pilon, which was based on “piloncitos,” tiny engraved gold coins used in the country’s Archaic period. These coins eventually replaced the barter system, which was more difficult as Filipinos would trade with goods instead of money.

Since piloncitos fixed the inconvenience of barter, Lee and Chua used the name as their firm seeks to resolve the struggles in cash flow.

Startup hurdles

Just like any other startup company, Pilon’s journey wasn’t easy. Starting in 2020, as they could not fly in, the only tool they have to convince their potential client is through video calls. It was more difficult when they had to pitch against local fintech firms in the Philippines, which have the proximity and localisation advantage 

On top of that, Pilon’s integration with the local banks was also layered with hurdles as their banking partner requires them to adhere to strict technology compliance guidelines as they themselves are heavily regulated by Philippine central bank, Bangko Sentral ng Pilipinas.

“We count ourselves fortunate as the Supply Chain Financing concept has always been something that our client in the Philippines has wanted to implement. They were however unsure of how and where to begin until we presented our solution and offered a jump start for them. With the domain knowledge that was demonstrated and the technology that was ready for a beta rollout, we were appointed as the official partner.” said Lee.

One year later, Pilon launched its web app and is also now currently working with banks and financial institutions in Vietnam, Cambodia, and Singapore to improve the cash flow gaps for the local businesses. 

Asked about its last funding round, Lee said Pilon has about $6.9m (US$5.3m) combined funding to roll out three additional products linked to cash flow optimisation. Its investors include Wavemaker, Octava, and Polaris.

Wavemaker general partner, Andy Hwang, said they invested in Pilon because the fintech startup was able to help overcome small and medium-sized enterprises (SMEs) issues in cash flow whilst managing credit risk.

“Thanks to Pilon, SMEs that were traditionally excluded from the formal financial sector can now access much-needed financing to help them grow,” said Wavemaker.

 Wavemaker focuses on business-to-business, deep tech, and sustainability startups with good business models and Pilon fits well into their investment mandate.

 “Pilon fits well within our thesis as they are solving a meaningful problem in the B2B supply chain, allowing SMEs in emerging markets to grow,” it added.