How Technology Further Advances Supply Chain Finance
Tradewind Finance specializes in cross-border solutions for companies looking to make their mark in the global trade market. From finding the right suppliers to merchandising product, different kinds of financing can free up the working capital companies need to continue growing and expanding to meet the demands of a competitive world. As one of today’s top supply chain finance companies, Tradewind provides custom financial solutions for businesses operating in many different industries around the world.
Supply Chain Financing
Supply chain financing is one method of creating liquidity and generating working capital for a company. This method provides receivables financing and funding to suppliers based on the creditworthiness and overall financial strength of the buying party. It helps minimize financial risk among suppliers, manufacturers, and others.
Global supply chain finance programs can work with non-traditional financing options to support payables, receivables, and inventory. Additionally, using purchase order funding, inventory lending, letters of credit, and structured guarantees allows a lending company to meet the financial needs of all members of the business agreement.
The Benefits of Supply Chain Financing
Benefits of supply chain financing include:
- Simplification of paperwork, even when dealing with multiple suppliers
- Providing funding to foreign suppliers based on the buyer’s creditworthiness
- Suppliers receive early payments at lower costs
- Suppliers receive additional cash flow, which increases their volume of production and ensures a consistent supply of goods
- Extended payment terms can be negotiated with suppliers
- Trade debt is taken off suppliers’ balance sheets, which strengthens their financial position
- Suppliers benefit from quick funding and high advance payment rates
- Smaller supply companies are viable partners, increasing a buyer's available supply range
- Access to cost-effective markets globally
This kind of financing works to keep the money flowing between suppliers and buyers, so there is a consistent stream of product that can be used to create more revenue, more business, and increased cooperation between a company and its suppliers.
Companies that may be working with suppliers who are in a different country can face unique challenges regarding currency conversions and customs processes. Working with a trade finance firm allows a company to simplify things and focus on running their business by having the finance company as their point of contact to deal with these issues.
Technology and Supply Chain Financing
New technology is providing better ways of organizing finances and minimizing the financial risk taken on by different entities involved in these supply chain financing agreements. An increasing number of trade finance companies are utilizing the expertise of financial technology companies to track changes in the market and organize the complicated logistics surrounding international supply agreements.
Data analytics and big data are being used by some companies to spot gaps in international trade markets. These gaps in production could lead to new products or better methods of spreading resources from suppliers around the world. Data analytics can also be used to track shipments, analyze the creditworthiness of buyers, create risk-free money lending agreements, analyze the efficiency of supply chain trade, and much more.
Banks and other lenders can also leverage the data available to them. Lenders have data that shows the behavior of companies when it comes to funding their suppliers as well as their payments and receivables behavior. By taking this data, companies could see where they are losing money in the process and hopefully rework their methods of doing business to shore up these weak points where money is being lost.
Additionally, financing firms can use data analytics to analyze the financial strength of companies to create an effective financial agreement with their suppliers. Analyzing a complex set of financial information via computer could generate different solutions for working with potential risks than a human may have been able to find themselves.
Technologies such as artificial intelligence would further advances in the world of supply chain finance. These technological learning systems could assess data on a global level to provide insight into the bigger picture of global trade, as well as individually find where a company could benefit from different methods of financing and recommend how to go about the financing process.
Tradewind Finance is a leading international trade finance company working around the world with clients in a variety of industries. They specialize in creating working capital through supply chain financing and export factoring for companies small and large. Tradewind Finance is a leading expert in global trade solutions.