According to this year’s International Construction Market Survey, Hong Kong is one of the top ten most expensive global construction markets. While the market is home to innovative development and products, the report does not capture a crucial burgeoning issue: the expanding working capital gap currently plaguing the industry. Rising costs, delayed payments, projects overrunning and opaque supply chains have left contractors and subcontractors in a difficult position, where they are seeing profit margins shrinking and cash flow management becoming increasingly more complex. To effectively tackle these growing challenges, it’s essential to understand the root causes of this financial strain within the construction supply chain.
Unleashing the Potential of Unstructured Data
Affordable working capital remain elusive for many players in the Hong Kong construction industry, with almost HK$ 53.8 billion tied up in the sector annually due to outdated payment structures and paper-based processes. The absence of structured data has long been labelled the main culprit behind this hurdle. Yet, this data does exist – it’s just buried in physical documents, out of reach of subcontractors and suppliers that could utilise it to validate their financing needs. Details like worker attendance, equipment usage, and project progress are often scattered across various formats, an untapped goldmine of data that if digitised could revolutionise access to financial resources.
Leveraging Real-Time Field Data for Better Financing
Our findings indicate that access to digitalised field data can allow for greater operational efficiency and critical financial insights. The information, once fed into Riverchain’s proprietary risk model, enhances our ability to deliver tailored financial solutions for our customers in the construction industry while mitigating potential risks. To unlock these benefits, however, companies must prioritise capturing and digitalising on-site field data – a step which will require forging new partnerships in the industry.
Riverchain’s Singapore based partner, Novade Solution (“Novade”), for instance, understood the crucial need to digitalise at construction sites and has pioneered the digital capture and utilisation of on-site construction data. Their field management software captures real-time data with geolocation and timestamping, alongside strict quality control and safety measures, to provide their construction industry partners with critical information to streamline operational efficiency and transparency. This digital leap allows project managers to reevaluate operational tasks, automate workflows, and produce precise billing, enhancing the overall management of construction sites and opening pathways towards easier financing.
Rapid Financing Solutions by Riverchain
Understanding the urgency of financial needs in the construction industry, Riverchain offers a cash advance product, or factoring service, where we purchase invoices from our clients, providing them with an advance of up to 90% of the invoice value as fast as 48 hours. This swift process is supported by our robust digital infrastructure, designed to offer immediate financial relief to subcontractors.
Building a More Resilient Construction Industry
Thanks to digital data capture solutions, subcontractors and suppliers are now empowered to substantiate invoices and loan applications with real time evidence of task completion and materials usage. This capability not only increases their liquidity but also positions them to better negotiate financing terms, allowing for them to foster long-term sustainability and resilience in their operations.
To date, Riverchain has supported over 1,200 subcontractors and suppliers in their goal to secure better funding for their projects, pay their workers and strengthen their businesses independently of traditional financial institutions.
As we continue to break down the financial barriers within the construction industry, Riverchain is committed to driving technological advancements that empower businesses and promote a robust and resilient construction sector. By embracing digital these solutions, we are paving the way for a future where the industry is no longer hindered by working capital challenges but is thriving through innovation.