Unlocking working capital amid rising receivables – TCL

Healthy cash flows are the lifeblood of any company, fuelling day-to-day needs and enabling investments in growth and expansion. But when bottlenecks occur, the opposite happens making it harder to pursue new opportunities or even operate efficiently.  

TCL, a global consumer goods manufacturer headquartered in China, knows this challenge well. Rising accounts receivable was resulting in low cash flows and a material challenge to its capital management. They needed a way to restore working capital quickly and stay positioned for growth.  

A rising tide of receivables  

TCL has an extensive footprint in China and globally, with 48 R&D centres and 32 manufacturing bases supporting business activity in over 160 markets worldwide.¹

Over the years they’ve grown into a global leader in the TV market, shipping over 25 million units and commanding the second highest market share at 12.5% in 2023.² In premium product categories such as the 98-inch TV, TCL topped the competitive landscape in 2022 with over 32% market share globally.³

Supporting these achievements is a broad customer base spread around the world. But during a period of market uncertainty, accounts receivable management became an acute challenge due to the amount of time payments needed to arrive. The credit risks from these customers were also an issue, holding back growth and expansion plans.

After trying to manage these issues using short-term and long-term bank loans, TCL started searching for an option that was simpler, faster and could evolve with the company to meet its ongoing needs.

Accessing cash quickly

TCL worked with HSBC on a factoring finance solution that enabled them to access cash quickly from their accounts receivable in two key markets. The company saw an immediate range of benefits once this was put in place:

• Greater balance sheet stability
• Reduced financial expenses
• More cash available for investments
• New methods for managing credit risks

Drawing on the bank’s multi-currency capabilities, these initial successes have opened up opportunities for expanding these solutions in other markets across TCL’s footprint.

Sharing the DNA of globalisation

Building on TCL’s over 26-year relationship with HSBC, this factoring finance solution is the latest in a long line of strategic support over the company’s growth journey and reflects how the partnership continues to evolve.

Supply chain financing is another area of collaboration. Given HSBC’s understanding of TCL’s diverse and complex supply networks, a multi-layer supply chain financing solution is being developed that would increase access to cost-effective financing for TCL’s partners and build resilience.

TCL’s global footprint is a big part of why HSBC has proven an ideal partner, bringing practical awareness of the challenges inherent in international business – whether into or out of China – and the ability to tailor solutions to meet specific and timely needs.

As TCL plans for the future, they can invest confidently knowing that they have the support they need to manage any working capital challenges that may arise.