Trade Finance and Supply Chain Finance Innovation

One of the key factors of managing entire economy of a country or rather global economy depends on how smart one is on managing supply chain linked to it’s trade domestically or internationally. If we drill down further, apart from Documentary Trade, Open Account Trade practices are much more accessible, acceptable, and far-fetched extendable in our world today. There must be space for matured argument but no place of doubt that indulging into Supply Chain Finance techniques are widely satisfactory. Further deep dive into the same, we find the Treasurers who actually and realistically getting involved in dealing the steps towards a sound economic health of an organization. What does a treasurer need actually? Is it to just have a system to handle financial administration by reviewing financial reporting and advising the board on financial strategy? Next question would be, how do they enable themselves to find or propose the right financial strategy to their respective board? What could...

  While our increasingly digital world runs on global trade finance, trade finance is a process that has remained significantly analog. And such chasm between the two threatens global growth and limits opportunities for corporate banks and their clients.   Moreover, It is projected by the  Boston Consulting Group  that the trade finance market will grow by more than 50 percent by 2030—“bringing the global revenue pool for the industry to $68 billion in 2030.” This means there would be an additional $23 billion in revenues in play for trade finance players compared to 2020 levels of $45 billion.   However, a sizable gap in trade finance availability threatens this rosy scenario. A 2021  Asian Development Bank[1] study  estimated that the trade finance availability gap reached $1.7 trillion in 2020, representing 10 percent of global trade.   Time to modernize—Trade-finance-as-a-service Many factors contribute to the trade finance gap, and one import...

  The unsung heroes of the supply chain Most supply chain networks include several small suppliers who don’t get an opportunity to access the lucrative financing options available in the market, unlike the big players or anchors of the supply chain. Either they need to wait for months as per the invoice terms or are forced to offer heavy discounts to their buyers for early payments. Typically, a supply chain involves multiple steps, including procurement of raw materials, processing, production, and delivery of the product offerings. This network consists of not just the major players but also the lesser-known suppliers who play an equally important role in creating an ecosystem of international or domestic trade. Lesser-known suppliers need funds to run their business more than the tier 1 suppliers. However, the visibility in a supply chain is mostly limited to tier 1 suppliers. Globally, around USD 500 Billion cash is trapped between corporates and their suppliers, and it peaked ...

With SIBOS happening currently, Oracle Financial Services is excited to share a series of recorded informative sessions, webinars, and blogs. Whether it's building a unified corporate digital banking experience, bringing real-time visibility to cash and liquidity management, offering more choices for trade and supply chain financing, rebuilding credit and lending for speed and transparency, or simplifying treasury management for your clients, Oracle's Financial Solutions will help you bridge the digital gaps in your corporate banking system to achieve capital clarity.   Introduction Over the years, there has been considerable speculation on the impending growth of supply chain finance at a rate higher than growth in documentary trade. According to a  report by McKinsey , the CAGR for supply chain finance in the years 2019-2024 is expected to exceed 25%, as against 1-2% for documentary business. These indicators occurred before the Covid pandemic struck the world. The pandemic ...

EDIFactoring: What, why, and for whom? IKIGAI is a Japanese word, which means “reason for being”. Through this article, we are trying to arrive at the IKIGAI for Edifactoring messages and the ongoing innovations in the field proposed and worked upon by FCI in the Supply Chain Finance industry. Is the ongoing interest and excitement over edifactoring a rational, business-focused development or is just like a complex kryptonite? EDI stands for Electronic Data Interchange, using which companies can exchange information in electronic format rather than on paper. The same concept has been applied in factoring as well wherein factors can communicate with each other as well as perform or initiate some interdependent tasks, thereby simplifying the factoring process. FCI is a non-profit global representative body set up in 1968 for factoring and financing of open account domestic and international trade receivables. In 2002, FCI launched the edifactoring.com platform and has been continuously...