When it comes to financing international trade, there are a number of important factors to consider. Firstly, you need to have working capital available to cover the cost of goods and services. Secondly, you need to have a good understanding of the supply chain in order to ensure that goods are delivered on time. Finally, you need to be aware of the potential for automating certain aspects of the commercial finance process.
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Data for today’s episode is provided by Mercator Advisory Group’s report – Financing Commercial Trade: The Search for Liquidity.
3 Takeaways of COVID-19’s Impact on Commercial Finance, from the Industry:
Takeaway 1: A Rush to Cash.
- Companies are looking to draw down on revolving loans.
- Companies are paying close attention to working capital.
Takeaway 2: Supply Chain.
- There is a good citizenship effort underway to support smaller suppliers.
- Maintaining the supply chain helps to ensure it will be there when demand returns.
Takeaway 3: Shortcomings of Paper.
- There’s a strong sense of the shortcomings of paper processes in risk management.
- The exposure to paper processes will serve as a catalyst for accelerated digitization.
Mercator Advisory Group’s latest research report, Financing Commercial Trade: The Search for Liquidity, provides a direct view into the latest trends in technology and tools in the trade finance space. Traditional trade finance remains a primary method for managing risk and creating liquidity, especially for international commercial merchandise exports and imports. There are now more methods than ever before to access liquidity and promote both domestic and international flows of goods and services.
“One of the interesting things we discovered during discussions with industry participants has been a marked uptick in the recognition of working capital management effectiveness, particularly as the coronavirus sledgehammer policies hit businesses,” commented Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service, author of the report, “so expectations for the adoption of these and other digital solutions have greatly increased.”