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OUR BLOG
March 18, 2024
TRADE FINANCE & CYBERSECURITY: WHAT YOU NEED TO KNOW
In today’s digitally interconnected world, technology and digital platforms play
a critical role in global trade finance efficiency. While these advancements
improve speed and accessibility, they also expose trade finance systems to
cybersecurity risks. As stakeholders manage the complexity of international
trade, it is crucial to identify significant cybersecurity risks and implement
effective mitigation techniques to safeguard against potential threats.
1. PHISHING ATTACKS
The ongoing concern regarding phishing attacks remains a significant challenge
within the realm of trade finance. Cybercriminals employ deceptive tactics, such
as fraudulent emails or counterfeit websites, to illicitly obtain sensitive data
like login credentials and financial information. These activities not only
undermine the integrity of trade finance transactions but also expose
organisations to substantial financial and reputational risks.
To limit their vulnerability to phishing attacks, businesses should prioritise
investing in strong email security solutions such as spam filters, email
authentication protocols, and anti-phishing software. Furthermore, regular
training sessions to raise employees’ understanding of phishing strategies are
critical for equipping them to detect and report suspicious emails. Integrating
multi-factor authentication (MFA) improves security by necessitating additional
verification stages, reducing the likelihood of unauthorised access due to
compromised credentials.
2. DATA BREACHES
The protection of confidential data from breaches is a top priority for trade
finance operations. Breaches compromise the security and confidentiality of
trade finance data, which includes transactional details and sensitive customer
information, potentially leading to financial fraud, identity theft, and
regulatory non-compliance issues. As a result, trust in trade finance activities
is weakened.
To minimise the risk of data breaches, companies should utilise encryption
methods to protect sensitive trade finance data both while at rest and during
transmission. This measure serves to prevent unauthorised access to the
information. Furthermore, setting up access controls and user authentication
procedures in accordance with the principle of least privilege guarantees that
only authorised individuals can gain access to sensitive data. For identifying
and addressing security vulnerabilities within trade finance systems and
networks, conducting routine security assessments, penetration testing, and
employing Intrusion Detection and Prevention Systems (IDPS) are essential
measures.
3. RANSOMWARE ATTACKS
Ransomware attacks pose a severe threat to trade finance operations by
encrypting critical data and demanding ransom payments for decryption keys.
These attacks can disrupt business operations, cause financial losses, and
damage the reputation of organisations involved in trade finance.
To reduce the possibility of ransomware attacks, organisations must frequently
update backups of critical trade finance data and systems to facilitate recovery
in the case of an attack. Using endpoint security solutions with behaviour-based
detection and ransomware mitigation features is critical for detecting and
preventing ransomware threats before they cause damage. Furthermore, conducting
employee education and awareness efforts is critical for teaching employees
about the risks connected with downloading suspicious files or clicking on
harmful links, which reduces the likelihood of ransomware infections.
4. SUPPLY CHAIN RISKS
Supply chain risks present a unique challenge to trade finance operations, as
organisations rely on third-party vendors, service providers, and trading
partners to facilitate transactions and support business processes. However,
vulnerabilities within the supply chain can expose trade finance operations to
cyber threats such as supply chain attacks, data breaches, and malware
infections.
To mitigate supply chain risks, organisations must perform due diligence and
risk assessments of third-party vendors to evaluate their cybersecurity posture
and adherence to security best practices. Establishing contractual agreements
that include cybersecurity requirements, data protection clauses, and incident
response protocols is crucial for ensuring accountability and mitigating
potential risks. Continuous monitoring and auditing of third-party access to
trade finance systems and data help detect and mitigate security incidents
promptly.
5. INSIDER THREATS
Insider threats represent inherent dangers that make it difficult to maintain
data security within trade finance operations. Privileged personnel may
purposefully or unintentionally violate data security, resulting in data
breaches or fraudulent acts that jeopardise the integrity of trade finance
transactions.
To address the risks associated with insider threats, organisations must adopt
strict role-based access controls and robust user monitoring techniques to
detect unusual behaviour as soon as possible. Regular employee background checks
and strict security standards for the management of sensitive information are
critical strategies for mitigating insider dangers. Furthermore, using user
activity monitoring and behaviour analytics technologies can assist in
identifying deviations from regular behaviour patterns, allowing organisations
to respond quickly to any insider threats.
In conclusion, protecting trade finance operations from cybersecurity risks
necessitates a proactive and multifaceted approach that includes technical
controls, personnel education, risk management techniques, and incident response
readiness.
At Incomlend, we strive to remain at the forefront of cybersecurity by
implementing all available safeguards against cyber assaults on ourselves and
our clients. Your digital safety is our top priority!
Read more
February 22, 2024
INCOMLEND GROUP ACQUIRES WEB 3 FINTECH, LC LITE
Incomlend Group, a global invoice finance marketplace for SMEs, recently
revealed its strategic acquisition of LC Lite, a specialised trade finance
marketplace, integrating Web3 technology into its platform. This strategic
initiative is focused on leading the way in creating a new asset category that
merges the reliability of receivables financing with the growth opportunities
found in digital asset values.
Thanks to the acquisition, LC Lite will enable the company to utilise a new
fintech platform, broadening its audience to both crypto and fiat investors in
trade finance and speeding up its expansion in the Middle East. It also
guarantees that investors have simultaneous access to both the LC Lite and
Incomlend platforms, each with its own separate fintech solutions.
Expanding Incomlend’s platform services will now allow transactions to be
conducted in any currency to finance an exporter. Discussing the recent
collaboration, Morgan Terigi, co-founder and CEO at Incomlend, expressed
excitement over the acquisition of the fintech LC Lite.
‘’This allows us to connect the crypto and fiat spaces, which will be essential
as both markets grow and new technologies emerge. This merger will also enhance
the marketplace’s liquidity, ultimately contributing to the growth of the UAE
economy.’’
Jean-Charles Devin, Co-founder and Director at LC Lite, also mentioned that by
partnering with Incomlend, LC Lite can enhance its business model and increase
the value of its digital assets on the platform, leveraging its successful
two-year track record.
“Furthermore, with the LC Lite technology, Incomlend will be able to venture
into the web3 digital world” Devin concluded.
The merger with LC Lite allows Incomlend to expand their fintech services to a
broader audience of investors, helping them provide their services to a larger
group of investors and further their goal of enhancing financial inclusion in
Singapore.
Read more
15/01/2024
TRADE FINANCE TRENDS TO WATCH IN 2024
Trade finance is an important part of international trade because it provides
businesses with the financial backing they need to conduct cross-border
transactions. Trade finance trends evolve alongside the global economy. In this
article, we’ll look at the top trade finance trends to watch in 2024 and how
they will affect businesses and the trade industry as a whole.
The Growth of Export Finance
Export finance, often known as export credit, is a type of trade finance that
offers financial assistance to enterprises that export goods or services. This
sort of funding has grown in popularity in recent years and is projected to
expand further in the future.
One of the primary reasons for the development in export finance is the growing
demand for goods and services from emerging economies. As these markets expand,
businesses seek new ways to fund their export efforts and capitalize on the
opportunities they bring.
Furthermore, export funding is becoming increasingly available to small and
medium-sized businesses (SMEs). This enables smaller enterprises to compete in
the global market and broaden their scope.
Digitalization of Trade Finance
The trade finance business has traditionally been paper-based, with a strong
emphasis on physical papers and manual operations. However, with the advancement
of technology, the industry is undergoing a digital transition.
Digital trade finance is the use of technology to streamline and automate trade
financing procedures. This involves the use of electronic documents, online
platforms, or blockchain technology.
The digitization of trade finance provides various advantages, including
enhanced efficiency, competitive pricing, and improved security. It also
facilitates coordination among various stakeholders involved in a trade
transaction, including lenders, exporters, and importers.
The Rising Importance of Trade Credit
Trade credit, sometimes known as supplier credit, is a sort of short-term
financing that enables firms to purchase goods or services on credit from their
vendors. This sort of funding has grown in popularity in recent years and is
projected to expand further in the future.
One of the primary reasons for trade credit’s growing importance is purchasers’
increased need for flexible payment arrangements. As firms seek strategies to
manage their cash flow and decrease financial risk, trade credit provides a
feasible option.
Furthermore, as digital platforms that connect buyers and suppliers grow in
popularity, trade finance is becoming more accessible to businesses of all
sizes. These systems enable enterprises to easily negotiate and monitor trade
credit arrangements, making them a more appealing option for financing trade
transactions.
The Effect of Geopolitical Events on Trade Finance
Geopolitical events, such as trade wars and political instability, have a
considerable impact on the global economy and, by extension, trade finance. In
recent years, we have seen how these occurrences can disrupt supply chains and
generate uncertainty for enterprises involved in international trade.
In 2024, geopolitical events will continue to have an impact on trade finance.
As countries continue to negotiate trade tensions and political upheavals,
businesses must be prepared for unexpected disruptions and have backup plans in
place.
This could lead to an increase in demand for trade finance products like trade
credit insurance, which can help alleviate the financial risks associated with
such situations.
The Development of Alternative Financing Options
Traditional trade finance products, such as letters of credit and documentary
collections, have long been popular among international trade enterprises.
However, in recent years, we have seen the growth of alternative financing
solutions that provide greater flexibility and better conditions to firms.
One of the most important alternative financing possibilities is supply chain
finance, which enables businesses to obtain funding based on their supply chain
partnerships. This sort of financing is especially useful for SMEs since it
allows them to use the creditworthiness of their larger customers to obtain
finance at reduced rates.
The importance of sustainability in trade finance
Sustainability has become a priority for both organisations and consumers, and
this trend is projected to continue in the future years. As a result, we may
expect to see sustainability becoming more important in trade financing.
One way this could materialise is through the use of sustainable trade finance
products like green trade finance and sustainable supply chain financing. These
products offer finance to firms that engage in sustainable activities such as
renewable energy projects or sustainable supply chain operations.
Furthermore, we may witness a rise in demand for sustainable due diligence in
trade financing transactions. This might include requiring enterprises to
demonstrate their sustainability practices and policies before being accepted
for financing.
Importance of Risk Management in Trade Finance
As the global economy grows increasingly integrated, the dangers associated with
international trade increase. This makes risk management an essential component
of trade finance, and we should expect to see a growing emphasis on it in the
coming years.
One way this could materialise is the use of technology to identify and manage
risks in trade finance transactions. This could entail applying artificial
intelligence and machine learning to data analysis and risk identification.
Furthermore, we may see an increase in the usage of trade credit insurance,
which can assist reduce the financial risks connected with international trade.
This sort of insurance covers non-payment by purchasers, political hazards, and
other trade-related risks.
Conclusion
The trade finance market is continuously evolving, and organisations must stay
up to date on the latest developments to remain competitive. In 2024, we may
anticipate an increase in export finance, digitization of trade finance, and the
growing relevance of trade credit.
Geopolitical events will continue to affect trade financing, and businesses must
be prepared for unexpected interruptions. In the future years, the trade finance
environment will be shaped by the rise of alternative financing sources, as well
as an increased focus on sustainability and risk management.
Businesses that remain aware and react to these trends can position themselves
for success in the ever-changing world of trade finance.
Read more
December 12, 2023
GLOBAL TRADE FINANCE IN 2023: A YEAR IN REVIEW
As we say goodbye to 2023, it’s time to look on the significant features and
trends that defined the global trade finance landscape. Geopolitical movements,
technical improvements, and changing economic landscapes have all contributed to
substantial changes in the realm of international trade. In this article, we’ll
look at the important events that shaped global trade finance in 2023.
1. Digital Transformation Becomes the Centre of Attention
The rapid adoption of digital technologies in trade finance was one of the most
visible trends in 2023. Blockchain, artificial intelligence, and other
cutting-edge technologies were crucial in speeding procedures, eliminating
paperwork, and increasing transparency. The usage of smart contracts on
blockchain systems has grown in popularity, allowing for secure and quick
transactions while reducing the danger of fraud.
2. Green Finance and Long-Term Trade
The year 2023 marks a watershed moment in the trade finance sector, with
sustainability taking front stage. Green finance initiatives gained traction,
with more corporations implementing environmental, social, and governance (ESG)
principles into their trade financing processes. Financial institutions became
increasingly willing to sponsor environmentally friendly initiatives, and
sustainable trade finance products gained traction, harmonising with global
efforts to mitigate climate change.
3. Resilience in the Face of Global Supply Chain Disruptions
In 2023, global trade faced unprecedented hurdles, with supply chain
interruptions caused by a variety of circumstances including the ongoing
pandemic, geopolitical tensions, and natural calamities. Trade finance has
become an essential instrument for businesses looking to remain resilient in the
face of these upheavals. Supply chain financing and trade credit insurance were
critical in assisting businesses in navigating uncertainty and assuring a
consistent flow of products and services despite the hurdles.
4. Geopolitical Shifts and Trade Policy Modifications
Changes in alliances, trade agreements, and policy changes impacted the movement
of commodities and services as geopolitical forces continued to influence global
trade patterns. Trade disputes between major economies have changed trade
finance tactics, leading corporations to re-evaluate risk management procedures
and explore alternate markets. Professionals in trade finance have found
themselves adapting to a shifting geopolitical context, looking for new
opportunities while managing associated risks.
5. Digitalization of trade and cross-border payments
The digital revolution in trade finance went beyond the implementation of
cutting-edge technologies. With the widespread use of digital currencies and
central bank digital currencies (CBDCs), cross-border payments have undergone a
shift. The goal of this change was to streamline payment processes, lower
transaction costs, and increase the speed of cross-border transactions.
Integration of digital payment platforms into trade finance ecosystems has
become more frequent, resulting in increased efficiency and transparency.
6. Regulatory Advances and Compliance Challenges
To keep up with the digitization of the trade finance sector, regulatory
frameworks had to develop. Global regulatory organisations implemented measures
to handle the difficulties and opportunities posed by technological
breakthroughs. Compliance with international trade regulations got more complex,
necessitating investments in advanced risk management systems to successfully
navigate the regulatory landscape.
7. The Evolution of Trade Finance Platforms
Trade finance platforms like Incomlend grew in popularity in 2023 as businesses
sought integrated financing solutions. These platforms provided end-to-end
visibility by bringing together diverse parties in the trade finance ecosystem,
such as buyers, sellers, financial institutions, and logistical providers. These
systems use data analytics and artificial intelligence to improve cooperation,
expedite operations, and deliver real-time insights into trade activities.
Reflecting on the important highlights of global trade finance in 2023, it is
clear that the sector has undergone significant transformation. The
digitalization of processes, the emphasis on sustainability, and the resilience
shown in the face of supply chain disruptions have transformed how organisations
handle international commerce. In the future, the ongoing growth of technology,
the emphasis on sustainable practices, and the ability to handle geopolitical
difficulties will all be significant aspects defining the future of global trade
finance. To prosper in the ever-changing world of international trade,
businesses and financial institutions must stay nimble, adaptive, and
forward-thinking as we enter a new century.
Read more
November 20, 2023
HOW BLOCKCHAIN CAN REVOLUTIONISE INTERNATIONAL TRADE FINANCE AND SUPPLY CHAINS
Supply networks and financial dealings must be efficient and open to all parties
involved in the complicated web of international trade. Traditional trade
finance systems, packed with complexities and inefficiencies, have long been a
roadblock in the seamless flow of products around the globe. Blockchain
technology, a distributed and transparent ledger system, is entering the scene
and radically altering the world of trade finance and global supply chains.
Challenges in Trade Financing and Supply Chain Management
International trade would not be possible without trade finance, which includes
a wide range of monetary tools and procedures designed to ease cross-border
transactions. The traditional trade finance system is built on paper-based
documentation, such as letters of credit and bills of lading, which causes
delays, inaccuracies, and a lack of transparency. Important links in the global
supply chain, import and export procedures nevertheless confront hurdles
including the inefficiency of paper-based processes and the possibility of fraud
and inaccuracies.
Information asymmetries and inefficiencies are common in the global supply
chain, a complex network involving various stakeholders from manufacturers to
distributors to retailers. The lack of real-time insight into the movement of
commodities can result in delays, greater expenses, and a higher likelihood of
errors. These obstacles not only slow down trade but also put enterprises at
serious danger financially.
The Blockchain Revolution
A decentralised and distributed ledger that records transactions over a network
of computers is at the heart of the blockchain revolution. Although initially
recognised for its role in the creation of virtual currencies like Bitcoin, the
blockchain technology behind them has shown to have far-reaching ramifications
outside the domain of digital currencies. Blockchain’s decentralised nature,
transparency, and immutability make it a potential game-changer in international
trade finance and supply chain management.
Blockchain’s distributed ledger structure removes the middleman from financial
dealings. In the context of international trade finance, this means that parties
to a transaction can communicate with one another in a fully automated way by
using smart contracts. Since the parameters of the contract are public and
cannot be changed, the time spent on transactions is cut down significantly, and
the likelihood of fraud and disputes is reduced.
But what is a smart contract?
A smart contract is like an online deal that lives on a computer. It’s a
computer programme that, when certain conditions are met, will automatically
carry out, enforce, or check the terms of a contract. Think of it as a contract
that follows its own rules, which are written in code.
If you have a smart contract, the terms of your deal are written in a language
used for writing computers and saved on the blockchain, which is like a safe and
open digital record. This makes sure that the contract can’t be changed and can
be seen by everyone concerned.
Also, it’s fully decentralised and reliable: this means that the deal doesn’t
need to be watched over by a third party, like a bank or a lawyer. The code
itself makes sure that the agreement is followed, which makes the whole process
more reliable.
An easy way to think about a smart contract is as a computer programme that does
what it is told to do. When the agreed-upon conditions are met, it acts on its
own. This makes agreements more safe, clear, and automatic.
Another area where blockchain can help is indeed trade finance and supply chain.
The blockchain records all transactions in a distributed ledger that is
accessible to all parties involved in the transaction in real time. With this
level of visibility, all parties involved in the supply chain can follow
packages as they travel from manufacturer to retailer. This not only decreases
the danger of fraud but also enables speedier identification and resolution of
issues such as delays or anomalies.
Because of blockchain’s immutability, once a transaction has been recorded, it
cannot be changed or removed, adding another layer of security to the system’s
decentralisation and transparency. The immutability of the blockchain means that
all parties involved in a trade finance transaction can have faith in the data
being presented to them.
Trade finance and supply chain management have the potential to become more
efficient and transparent if blockchain is adopted. LC Lite, our sibling firm,
is a blockchain-enabled platform that digitises global trade receivables finance
using a unique token-powered transaction mechanism. For further information,
sisit LC Lite website for more info.
Read more
October 15, 2023
GLOSSARY OF TRADE FINANCE: TERMS AND DEFINITIONS
Trade finance is a complicated and multidimensional topic with specialised
language that can be intimidating to newbies. In this blog post, we’ll demystify
trade finance by giving a dictionary of key terminology and meanings, allowing
you to more efficiently navigate the complex world of global commerce and
finance.
Letter of Credit (LC): A financial instrument issued by a bank on behalf of a
buyer (importer) to pay a seller (exporter) a particular sum if certain criteria
are met. In international transactions, LCs provide security and trustOpen
Account: A transaction in which products are transported and delivered before
payment is received. The exporter believes the importer will pay at the
agreed-upon future date.
Export Credit Insurance: A policy that protects exporters from non-payment by
international purchasers. It guarantees that the exporter will be compensated
even if the buyer fails to pay.
Importer of Record (IOR): The person or entity in charge of ensuring that
imported products comply with all applicable rules and regulations. They are
also obligated to pay import charges and taxes.
Bill of Lading (B/L): A legal document issued by a carrier (often a shipping
business) to confirm the receipt of goods for transportation. It functions as
both a receipt and a carriage contract.
Bank Guarantee: A guarantee given by a bank on behalf of a customer to assure
that a contract will be fulfilled. It serves as a financial safeguard.
Risk Mitigation: The practise of reducing exposure to financial or operational
risk in international trade, which is frequently accomplished through insurance,
hedging, and other measures.
Forfaiting: A trade financing practise in which a forfeiter (often a bank or
financial institution) purchases an exporter’s receivables at a discount,
resulting in rapid cash flow.
Documentary Collection: A technique of trade payment in which a bank works as an
intermediary to enable payment between an exporter and an importer based on the
presentation of specific papers.
Incoterms: A collection of internationally recognised trade terminology that
specify the responsibilities of buyers and sellers in international trade, such
as FOB, CIF, and EXW.
Trade Finance Facility: A financial institution’s credit or financing
arrangement to assist a company’s international trade activities, such as
working capital loans and LCs.
Sight Draft: An instant payment demand, usually related with documentary
collections. The importer must pay when the draught and related paperwork are
presented.
Cross-Currency Swap: A financial arrangement in which participants swap one
currency for another at a predetermined exchange rate and then reverse the
transaction at a later date.
Eximbank: A government agency or financial organisation that provides trade
financing solutions and export credit insurance to help a country’s exports and
economic growth.
Due Diligence: The process of analysing and evaluating potential trade partners’
financial and legal backgrounds to ensure they are reliable and trustworthy.
Demurrage: Charges incurred when cargo is not unloaded from a vessel within the
agreed-upon time frame, which is frequently due to delays or inefficiencies.
Force Majeure: A phrase in a commercial contract that exempts parties from
contractual duties due to unanticipated occurrences such as natural disasters or
political unrest.
Commercial Invoice: A document delivered by the seller to the buyer that details
the products sold, their prices, and other transaction details.
Consolidation: The process of consolidating numerous smaller shipments into one
larger package in order to save money on shipping.
Hedging: A financial strategy that helps to limit risk in international trade by
protecting against unfavourable currency exchange rate swings.
ICC Rules: A set of standardised rules and guidelines established by the ICC to
manage international trade practises, including the Uniform Customs and Practise
for Documentary Credits (UCP 600).
When you understand the fundamental concepts, navigating the world of trade
finance becomes less intimidating. This dictionary is an invaluable resource for
anyone active in international trade or interested in learning more about the
complex world of trade finance. Understanding these words will allow you to make
more educated judgements, negotiate contracts, and manage the financial side of
global trade more successfully.
Read more
September 14, 2023
THE FOUR PILLARS OF TRADE FINANCE: PAYMENT, RISK MITIGATION, FINANCING, AND
INFORMATION.
The flow of products and services across international borders is facilitated by
trade financing. For international business to run smoothly and with minimal
disruption, four fundamental pillars must be in place. Payment, risk management,
financing, and data are the four mainstays. An effective and reliable trade
financing system rests on four distinct but interrelated pillars.
1. Payment
Payment is the fundamental part of any business transaction and describes the
process by which purchasers pay providers of products and services in
international trade. For there to be mutual confidence between traders, the
payment system must be safe, quick, and open.
Letters of Credit (LC) are widely utilised in international trade as a means of
payment. A LC is a bank guarantee that the seller will be paid once the terms
and conditions of the agreement have been met. As the bank of the buyer
guarantees the payment upon presentation of the necessary paperwork, this
creates a level of confidence between the buyer and the seller. This system
reduces the seller’s exposure to non-payment, a critical issue in cross-border
transactions.
2. Protecting Financial Deals from Danger
Risk mitigation is the second pillar of trade finance, and it’s crucial for
shielding both buyers and sellers from the many dangers inherent in cross-border
transactions. Political unpredictability, economic volatility, swings in
exchange rates, and other factors all pose potential dangers. Trade ties can
only survive if these dangers are reduced as much as possible.
Trade credit insurance is a frequent method for reducing exposure to risk. This
insurance shields exporters from financial loss should international buyers
default on payments for goods or services they have purchased. It’s a cushion
that helps exporters get into new markets with less concern about getting
stiffed on payment.
Forward contracts and currency hedging are two more methods for reducing
exposure to fluctuating exchange rates. Businesses can reduce the risk
associated with currency changes by using these financial products to lock in
favourable exchange rates.
3. Money: The Oil That Keeps Business Turning
The third pillar of trade finance is financing, which provides companies with
the money they need to compete successfully on the global stage. Manufacturing,
shipping, and warehousing are just some of the up-front expenditures that may
add up quickly in a trade transaction. Without affordable finance options and
enough cash flow, many companies would be unable to compete in international
markets.
Trade credit is an important component of trade finance. Providing buyers with
trade credit entails allowing them to delay payment for a certain amount of
time. Sellers have an advantage in the market while purchasers are better able
to control their cash flow thanks to this arrangement. Financial institutions
that specialise in trade finance often provide trade credit by meeting the
unique financing requirements of international trading companies.
In addition, supply chain finance has become increasingly common. By
capitalising on the buyer’s high creditworthiness, it allows suppliers to gain
access to early payment for their bills at a reduced cost. By increasing
liquidity for both buyers and sellers, this scenario enhances the entire supply
chain.
4. Knowledge is power. Information is power
The fourth and maybe most important aspect of trade finance is information. In
today’s digital era, it’s more important than ever to have instantaneous access
to reliable data in order to make educated choices about international business
transactions. Data on possible partners, trade restrictions, and market
intelligence are all examples of information.
Trends, demand patterns, and competitor actions can all be better understood
with the help of market intelligence. With this knowledge, companies will be
better prepared to respond to the ever-changing conditions of the global
economy.
It is equally important to be familiar with the rules and norms governing
international trade. Companies risk hefty penalties and loss of credibility if
they are found to be in violation of international trade laws and regulations.
As a result, knowing the rules governing international trade is crucial.
Conclusion
The four pillars of trade finance – payment, risk mitigation, financing, and
information – collaborate in the complex web of international trade to enable
the orderly exchange of goods and services. Trust is cultivated through the use
of payment channels like Letters of Credit, and risks are mitigated through the
use of risk mitigation products like trade credit insurance. Capital is made
available through financing options like factoring, and information helps firms
make educated choices.
These cornerstones continue to develop and change to fulfil the requirements of
international trade in a dynamic global economy. Trade finance, supported by its
four cornerstones, will continue to play a vital role in facilitating global
commerce even as technology and markets evolve.
Read more
August 15, 2023
THE TRANSFORMATION OF COMMERCIAL LENDING: HOW TECHNOLOGY HAS REVOLUTIONIZED
PROCESSES AND ENHANCED USER EXPERIENCE
In recent years, the commercial lending industry has undergone a profound
transformation with the rapid integration of technology. As businesses continue
to evolve and expand, so too have the demands for quick, efficient, and
user-friendly lending processes. Technology has played a crucial role in meeting
these demands, revolutionizing the way commercial lending is conducted. In this
article, we will explore the impact of technology on commercial lending,
focusing on how it has improved processes and user experience.
1. Streamlining Financing Applications
Traditionally, applying for a commercial loan involved arduous paperwork and
prolonged processing times. However, with the advent of online platforms and
digitized documentation, borrowers can now submit applications with ease and
speed. Technology enables lenders to capture, organize, and analyze vast amounts
of data, facilitating a more informed and accurate decision-making process.
Advanced algorithms assess risk profiles, creditworthiness, and potential
profitability, leading to faster loan approvals and increased efficiency. With
Incomlend, for example, you can open a free account in few minutes.
2. Enhanced Data Analytics and Risk Assessment
Data analytics in commercial lending has been transformed by the use of
technology. Big data can now be used by financial organisations to acquire
extensive insights into borrower behaviour and market trends. Lenders can make
better educated lending decisions by analysing past performance, cash flow
estimates, and industry-specific parameters. This reduces risks and ensures loan
sustainability. Real-time loan performance monitoring also enables lenders to
take proactive efforts to address possible concerns as soon as they arise.
3. Automation of Routine Tasks
Many regular procedures that were once time-consuming and error-prone have been
automated by technology. Back-office activities like as data entry, document
verification, and compliance checks have considerably improved since the
introduction of robotic process automation (RPA) and artificial intelligence
(AI). Human resources are freed up to focus on more crucial areas of the loan
process when these jobs are transferred to machines, enabling increased
efficiency and accuracy.
4. Personalized Customer Experience
Lenders may now give a more personalised customer experience thanks to the
inclusion of technology. CRM systems allow lenders to track interactions,
preferences, and pain spots, allowing them to customise loan products and
services to particular client needs. Furthermore, modern contact methods such as
live chat and email support provide borrowers with rapid and accessible access
to help, increasing overall satisfaction. Now is the time to try our live chat!
5. Improved Accessibility and Transparency
Technological advancements have made commercial lending more accessible to a
broader audience. Online lending platforms and peer-to-peer lending have
democratised access to financing, allowing SMEs to seek money outside of
established banking channels. Furthermore, technology has increased transparency
in the lending process by allowing borrowers to track the status of their loan
applications in real time and receive extensive information on loan terms and
conditions.
6. Efficient Credit Limits Assessment
Credit assessment, a critical aspect of the lending process, has seen
significant improvements through the use of technology. Automated credit scoring
models assess borrower creditworthiness with greater accuracy, considering
various factors beyond traditional credit scores. By leveraging machine learning
algorithms and technology, lenders can better predict default risks and tailor
loan terms accordingly, striking a balance between profitability and risk
management.
Conclusion
The integration of technology in commercial lending has undoubtedly
revolutionized the industry, improving processes and user experience alike. From
streamlined loan applications to enhanced data analytics, automation of routine
tasks to personalized customer service, technology has paved the way for a more
efficient and inclusive lending ecosystem. As technology continues to evolve,
the commercial lending sector can expect further advancements, reinforcing its
role as a catalyst for economic growth and prosperity. Nevertheless, it is
crucial to strike a balance between technological innovation and human
expertise, ensuring that the benefits of technology are harnessed responsibly
and sustainably in the future.
Read more
July 12, 2023
DEMYSTIFYING INCOTERMS: A GUIDE FOR GLOBAL TRADERS
Exporters and importers must traverse a complex web of regulations and processes
in the world of international trade. Understanding Incoterms is an important
part of this procedure. But what are Incoterms, and why do exporters and
importers need to know about them? In this post, we will debunk Incoterms,
explain their meaning, and look at how they are used in trade finance around the
world.
WHAT ARE INCOTERMS?
Incoterms are a set of standardised regulations established by the International
Chamber of Commerce (ICC). These rules specify the obligations, risks, and
expenses connected with international commerce transactions involving the
transportation and delivery of commodities. Incoterms guarantee that both
parties involved in a transaction understand their responsibilities, reducing
misunderstandings and disagreements.
WHY ARE INCOTERMS SO IMPORTANT TO EXPORTERS AND IMPORTERS?
1. Clarity and Communication: Incoterms serve as a common language for exporters
and importers, ensuring that all parties involved understand the trade’s terms
and circumstances. Incoterms remove ambiguity and encourage successful
communication by defining each party’s duties.
2. Risk and Cost Allocation: Understanding Incoterms assists exporters and
importers in determining who bears the risks and expenses involved with goods
transportation, insurance, and customs clearance. Unexpected expenses and
disagreements are avoided when these duties are clearly defined, allowing
traders to make educated judgements.
3. Legal Compliance: Because Incoterms are widely recognised and acknowledged in
international trade, they are an important instrument for guaranteeing legal
compliance. Exporters and importers can negotiate complex customs procedures and
complete their legal duties by following these principles.
THE USE OF INCOTERMS IN GLOBAL TRADE AND FINANCE:
1. Global Consistency: Incoterms are generally recognised and used throughout
the world. They make trade activities run more smoothly by offering a
standardised framework that crosses cultural, legal, and linguistic obstacles.
Incoterms ensure a shared understanding of trade obligations whether you’re
trading with partners in Europe, Asia, or anywhere else in the world.
2. Trade Finance: Incoterms are important in trade finance because they
determine when ownership and risk move from the seller to the buyer. When
granting letters of credit or other trade finance instruments, banks and
financial institutions need this information. Incoterms reduce financial risks
and promote secure payment processes by precisely specifying the parameters of
the transaction.
3. Selecting the proper Incoterm: Exporters and importers must carefully choose
the proper Incoterm for their individual trade transaction. This decision is
influenced by factors such as the nature of the commodities, the desired level
of control, and the buyer-seller relationship. Understanding the various
Incoterms and their ramifications allows merchants to negotiate better terms and
maintain a smooth and efficient supply chain.
WHAT ARE THE INCOTERMS USED IN GLOBAL TRADE FINANCE?
1. EXW (Ex Works):
The seller makes the goods available at their premises, and the buyer is
responsible for all transportation, customs clearance, and risk from that point
onward.
2. FCA (Free Carrier):
The seller delivers the goods to a carrier or another nominated party at a
specified location. The buyer is responsible for transportation and any costs
incurred after delivery.
3. CPT (Carriage Paid To):
The seller arranges and pays for the transportation of goods to the agreed-upon
destination. However, the risk transfers to the buyer once the goods are handed
over to the carrier.
4. CIP (Carriage and Insurance Paid To):
Similar to CPT, the seller is responsible for transportation to the agreed
destination and also arranges insurance against the buyer’s risk of loss or
damage during transit.
5. DAP (Delivered at Place):
The seller delivers the goods to the buyer at a specified location, ready for
unloading. The seller bears the risks and costs of transportation to that point,
excluding import customs clearance.
6. DDP (Delivered Duty Paid):
The seller is responsible for delivering the goods to the buyer, ready for
unloading, and assumes all risks and costs, including customs duties and taxes.
7. FAS (Free Alongside Ship):
The seller is responsible for delivering the goods alongside the vessel at the
specified port of shipment. The buyer assumes all risks and costs from that
point, including loading the goods onto the ship and clearing customs.
8. FOB (Free on Board):
The seller is responsible for delivering the goods on board the vessel at the
specified port of shipment. The buyer assumes all risks and costs from that
point, including transportation, insurance, and customs clearance.
9. CFR (Cost and Freight):
The seller arranges and pays for the transportation of goods to the specified
port of destination. However, the risk transfers to the buyer once the goods are
on board the vessel.
10. CIF (Cost, Insurance, and Freight):
Similar to CFR, the seller arranges transportation to the specified port of
destination and also provides insurance against the buyer’s risk of loss or
damage during transit.
11. CIP (Carriage and Insurance Paid):
The seller is responsible for the carriage and insurance of goods to the agreed
destination. The risk transfers to the buyer when the goods are handed over to
the carrier.
CONCLUSION:
In the dynamic world of international trade, Incoterms serve as a vital tool for
exporters and importers. As you venture into the exciting realm of global trade,
take the time to familiarize yourself with Incoterms. They will empower you to
make informed decisions, mitigate risks, and build successful business
relationships across borders.
Read more
June 5,2023
UNDERSTANDING COMMERCIAL LENDING: WHAT YOU NEED TO KNOW
Commercial lending plays a vital role in providing businesses with the necessary
financial support to fuel their operations, expansion plans and technological
advancements. This article aims to provide a comprehensive overview of
commercial lending, its various types and the advantages and disadvantages it
offers. Additionally, we will highlight the significance of invoice finance as a
primary form of commercial lending.
DEFINITION
Commercial lending encompasses a wide range of financial services that cater to
the borrowing needs of businesses. It involves providing funds to companies to
meet their operational requirements, such as purchasing inventory, expanding
facilities, or investing in new technologies. Unlike consumer lending,
commercial lending focuses on supporting the growth and development of
businesses.
WHO CAN ACCESS COMMERCIAL LENDING?
Commercial lending is accessible to a broad range of entities, including small
and medium-sized enterprises (SMEs), large corporations, exporters, importers,
and institutional and accredited investors. Whether you are a business owner
seeking capital or an investor looking to provide funding, commercial lending
offers solutions tailored to your specific needs.
TYPES OF COMMERCIAL LENDING
Business Loans: Business loans are a common form of commercial lending,
providing businesses with a lump sum of capital that can be used for various
purposes. These loans often require collateral and are subject to repayment
terms, interest rates, and credit assessments.
Invoice Financing: Invoice financing, also known as invoice factoring, is a type
of commercial lending that focuses on leveraging outstanding invoices for
immediate working capital. Companies like Incomlend offer tech-enabled invoice
finance solutions, allowing businesses to upload their invoices to a marketplace
and receive funding within days.
Equipment Leasing: Equipment leasing provides businesses with the option to rent
or lease necessary equipment rather than purchasing it outright. This form of
commercial lending allows companies to access advanced machinery and technology
without a large upfront investment.
INVOICE FINANCE AS A PRIMARY FORM OF COMMERCIAL LENDING
Invoice finance is a type of commercial lending that allows businesses to access
the cash tied up in their unpaid invoices. This can be a valuable source of
funding for businesses that are struggling to meet their short-term cash flow
needs.
Invoice finance works by selling unpaid invoices to a third-party finance
company. The finance company then pays the business a percentage of the invoice
value upfront, with the remaining balance being paid when the invoice is due.
This can provide businesses with the cash they need to cover their expenses,
make payroll, or invest in growth.
There are a number of benefits to invoice finance, including:
* Quick access to cash: Invoice finance can provide businesses with quick
access to cash, which can be essential for meeting short-term cash flow
needs.
* Competitive interest rates: Invoice finance typically has competitive
interest rates, which can help businesses save money.
* No collateral required: Invoice finance typically does not require
collateral, which can be a major advantage for businesses that do not have
assets to secure a loan.
If you are a business that is struggling to meet your short-term cash flow
needs, invoice finance may be a viable option for you. Contact a commercial
lender today to learn more about how invoice finance can help your business.
ADVANTAGES OF COMMERCIAL LENDING
Access to Capital: Commercial lending provides businesses with the capital they
need to invest in their growth, meet operational expenses, and seize market
opportunities. It offers a reliable source of funding that aligns with the
unique requirements of each business.
Flexibility: Commercial lending solutions are flexible, allowing businesses to
choose the type and amount of financing that suits their specific needs. Whether
it’s a short-term bridge loan or a long-term business loan, commercial lending
offers tailored options to address different financial situations.
Faster Funding: Invoice financing, in particular, provides businesses with rapid
access to working capital by leveraging outstanding invoices. This allows
companies to maintain a healthy cash flow and meet their immediate financial
obligations.
DISADVANTAGES OF COMMERCIAL LENDING
Interest Rates and Fees: Commercial lending often involves interest rates and
additional fees that businesses must consider. It is important to carefully
evaluate the terms and conditions of the lending agreement to ensure the cost of
borrowing aligns with the expected return on investment.
Credit Assessment: Commercial lending typically involves credit assessments,
where lenders evaluate the creditworthiness of the borrowing entity. This can
pose challenges for businesses with lower credit scores or limited credit
history.
HOW TO GET STARTED AND ACCESS COMMERCIAL LENDING
To access commercial lending, businesses can follow these steps:
Identify Funding Needs: Determine the specific financial requirements of your
business, whether it’s for working capital, equipment acquisition, or expansion
plans.
Research Lenders/Providers: Explore different lenders and their offerings to
find the most suitable fit for your business. Consider factors such as interest
rates, repayment terms, geo-targeted expertise and case studies.
Prepare Documentation: Gather the necessary documentation, including financial
statements, tax returns, and business plans, to support your loan application.
Submit Application: Complete the loan application process by submitting the
required documents to the chosen lender. Be prepared to answer any additional
questions or provide further information as requested.
CONCLUSION
Commercial lending plays a crucial role in fueling the growth and success of
businesses across various industries. Whether through business loans, invoice
financing, or equipment leasing, commercial lending offers flexible and tailored
solutions to meet the unique financial needs of companies. Understanding the
different types of commercial lending and carefully evaluating the advantages
and disadvantages can help businesses make informed decisions and secure the
funding required to thrive in today’s competitive market.
Read more
May 10, 2023
SOLVING THE GLOBAL LOGISTICS PUZZLE: HOW TO PIECE TOGETHER YOUR EXPORT
OPERATIONS WITH WORKING CAPITAL FINANCING.
Maintaining operations as an exporter can be a steep challenge. International
trade markets can sometimes feel difficult to navigate, and exporters,
particularly ones operating with trade credit, can face challenges associated
with logistics as they contend with the hurdles sometimes associated with
international trade, such as the risk of non-payment, lengthy payment terms,
fluctuations in exchange rates, and even unexpected instability.
Naturally, exporting can present challenges in maintaining healthy cash flow and
funding operations in order to generate revenue. This can, unfortunately, become
a self-exacerbating problem. Delays in receivable payments that disrupt
operations and lead to an inability to fulfill further orders can create further
cash management problems, making the problem of securing funding solutions
worse.
In order to address these challenges, some organizations might utilize financing
solutions designed for exporters, some of which are aimed at easing burdens
typically associated with the export market.
FINANCING AND EXPORTING
Exporting goods for revenue can make it particularly challenging to meet cash
flow needs for a variety of reasons. Often these reasons include difficulties
that can arise as a result of exporting in markets that are vastly different
from domestic markets in many ways. Exporters can face challenges associated
with operating with importers who are accustomed to different payment terms,
fluctuations in exchange rates between global currencies, and more. As a result,
sourcing funds to operate can sometimes seem like an uphill battle, even using
traditional banking methods.
Supply chain finance and other types of financing solutions for exporters aim to
potentially ease some of these burdens by creating financing options that are
tailored to businesses like exporters who face unique challenges in maintaining
sufficient cash flow to continue operations, fulfill exports, and ultimately,
drive revenue.
Financial technology has shaped the financing process for many organizations and
helps drive many of the services designed to help export companies overcome cash
flow issues. Online platforms might help companies find financing solutions, for
example.
Cross border finance can be used to help organizations operate internationally.
Financing solutions for exporters might also be utilized in order to expand
operations or break into emerging markets.
SME finance aimed at global markets isn’t only relevant to exporters. At a
different point in the supply chain, import finance can similarly be used to
support export operations, as they can be used to enable importers to request
goods.
FINANCING OPTIONS FOR EXPORTERS
There are many trade finance options available to exporters that can be used to
address deficiencies in working capital sufficient to sustain exporting
operations. As sustaining operations is crucial to any business, and fulfillment
of orders to exporters is certainly no exception, some global finance options
may be able to enable exporters in critical ways. Supply chain finance and other
export finance might aim to ease burdens associated with cash flow lags and
logistics, for example. We’ll explore some of the financing solutions exporters
can use in addition to or alternatively to traditional banking. These might
vary; some financing solutions may rely on collateral while others may simply
rely on creditworthiness. Non recourse finance might be used by exporters in
order to meet cash flow needs.
INVOICE FINANCING
One of the issues that exporters sometimes face is a significant gap in time
between when they spend money to fulfill deliveries and when they actually
receive payment for said deliveries. Naturally, this can make invoice management
all the more crucial for exporters. Still, businesses with unpaid invoices, may
be able to leverage the theoretical trade receivables value of those invoices
through invoice financing. This might also be called receivables finance.
INVOICE DISCOUNTING
This is a financing option that can allow a company to borrow funds using their
unpaid invoices as collateral. Through invoice discounting, an exporting company
might be able to sell their unpaid invoices to another entity, called a factor,
generally at a discount. The factoring company can give the exporting company an
advance, then seek payment for the unpaid invoices, and pay the exporting
business the difference between the original advance and the payments received
for invoices, minus any fees the factor might charge as well as the discount.
INVOICE FACTORING
Similar to invoice discounting, invoice factoring involves leveraging the value
of unpaid invoices in order to free up funds that may be critical to operations
such as future deliveries. With invoice factoring, however, rather than
borrowing funds using invoices as collateral, a business can simply sell their
unpaid invoices to another entity. They might receive less, in exchange, than
their invoices could theoretically be worth, but they may be able to access
needed working capital for international trade quickly, as well as shed off the
risk of nonpayment to another organization.
PURCHASE ORDER FINANCE
Much like invoice discounting, this enables companies to utilize theoretical
future funds to secure an advance against, in the present for international
trade. However, with purchase order financing, rather than using unpaid invoices
as collateral, an organization might use purchase orders.
COLLATERAL FREE FINANCING
Some businesses earning revenue through exports and operating in international
trade markets may seek small business finance, but may not have access to assets
that can be used as sufficient collateral to assuage concerns about credit risk
and finance operations. However, they may need fast funding in order to sustain
operations. As such, some organizations might seek out financing options that
don’t require collateral. With sufficient creditworthiness, and through meeting
certain requirements like minimum turnover, they may be able to access funds
through collateral free finance. These options might include lines of credit
designed for exporters, export credit insurance, a letter of credit, and more.
ADDITIONAL CONSIDERATIONS AND APPROACHES
There are many other financing services available to exporters. We’ve explored
some of the common ways exporters can utilize financing in addition to or as an
alternative to banking in order to meet vital working capital needs while
operating in global markets and exporting goods. However, there are many ways
that exporters can manage cash flow, and optimize operations. For example,
invoice verification is a simple way to open a line of communication with
importers, which can help both parties avoid unnecessary future disputes, and
may even lead to more favorable payment outcomes.
THE BOTTOM LINE
Each company is unique. Accordingly, exporters should independently weigh the
benefits and risks of any financing they seek. Still, there are many financing
options available to businesses that operate in global markets and export
goods–many of which are specifically focused on helping address challenges that
can be associated with exporting goods. Some of these challenges might include
cash flow management, the risk of non-payment, and the potential for
miscommunication.
Through novel financing solutions driven by technology, and designed to help
exporters operate, exporters may be able to better sustain operations
successfully. To learn more about how financing solutions can help you with your
cash flow management, be sure to reach out to us at Incomlend for a free
consultation.
Read more
April 15, 2023
TRADE FINANCE AND FINTECH: WHAT EUROPEAN IMPORTERS MIGHT WANT TO KNOW
As the global trade finance gap widens, European importers should explore new
technologies to successfully compete in the marketplace.
Europe is one of the most economically dynamic regions in the world: The
European Union (EU) had a gross domestic product of US$16.6 trillion, which
amounted to a full one-sixth of the entire world. The region is also a major
importer, with some of the most popular categories being metals; machinery and
equipment; chemicals and chemical products; computer, electronic, and optimal
products; and electrical equipment.
Importers face a challenging competitive landscape in the EU. They have to
contend with the complexity of importing from multiple markets and possibly
redistributing across just as many markets across the EU. They face stiff
competition from importers not only in their own country but from those in
neighbouring countries, especially those that have a coast.
On top of these challenges, European importers have to deal with the same
problems that importers in other markets have to contend with. These are mainly
struggles with working capital. While they have favourable terms with exporters,
who they usually do not need to pay for as long as 90 or 120 days, they still
face a crunch in cash flow as a small business.
This lack of working capital affects how they do business: they cannot increase
the volume of the products they already import, they cannot expand the type of
products they import, and they cannot work with a greater diversity of
exporters.
To overcome these challenges, European importers might choose to excel at trade
finance. To do so, they must be made aware of several key facts and trends.
Let’s go through some of them together.
THE TRADE FINANCE GAP IS MONUMENTAL.
The trade finance gap stands at US$1.7 trillion, according to the Asian
Development Bank
This is the shortfall between importers and exporters who need capital, and the
amount of capital that they are unable to borrow.
Most importers, in other words, cannot get the capital they need. This stems
from the fact that they are likely trying to obtain the most common source of
capital, bank loans. But as traditional financial institutions, banks have an
extensive amount of requirements that most importers cannot meet.
In this kind of environment, the importer who has more capital has a doubly more
advantage, as most of their peers cannot get it.
TRADE FINANCE IS INTERSECTING WITH TECHNOLOGY.
Most people think of fintech as largely a consumer space. There are digital
banks; mobile money platforms; buy now, pay later apps, and so on. But fintech
is also transforming the business-to-business space, and trade finance is no
exception.
This transformation is driven by some of the technologies that dominate
headlines. Some companies are putting their record-keeping, including both
financial and non-financial information, on the blockchain. Since the blockchain
is a digital ledger, one that is famously immutable, this secures the
organization’s data. Other companies are even experimenting with artificial
intelligence for the risk assessment process.
European importers need to participate in these shifts. While trade finance has
long been a traditional industry, the entrance of cutting-edge tech means that
they have to get on board. The European importers who embrace these new
solutions will find themselves at an advantage over their more conservative
peers.
THERE ARE ALTERNATIVE FORMS OF FINANCING BEYOND BANK LOANS.
One of the most innovative new forms of financing is supply chain financing, or
reverse factoring. The way it works is simple: the importer involves the
participation of a third party or supply chain financier to enable their
suppliers to receive early payments against export invoices. This solution is
innovative for several reasons. The first is speed: the process is much faster
than a traditional business loan. Besides, it doesn’t figure as a loan on a
company’s balance sheet.
Secondly, the importer extends his credit line to his suppliers, who will be
happy to receive their funds right after shipping the goods.
Lastly, supply chain financing is more accessible. While most third-party
factoring companies do require trade history between partners, revenue
thresholds, and other requirements, these are considerably less stringent than
banks. This put supply chain financing within the reach of many more businesses
stuck in the trade finance gap.
TRADE FINANCE IN EUROPE
Trade finance is ever-changing, and Europe will be at the forefront of these
shifts, as a major importing hub in the world. Importers can choose to embrace
these changes: see finance as a competitive advantage, seek out new technologies
that enhance their supply chain or trade finance, and strive for alternative
forms of capital. The importers who lead these changes can grow their importing
business, expanding to include new products, markets, and customers.
Read more
March 23, 2023
SOCIAL IMPACT THROUGH SDGS: OUR COMMITMENT TO ESG
In the business world, the organizations most associated with social impact are
social enterprises, foundations, and B corporations. In sharp contrast,
enterprises in the supply chain, such as importers and exporters, are rarely
viewed as organizations that make a difference. Most see them as purely
profit-driven enterprises bent on either maximizing how much they can sell goods
for (i.e., exporters), or how much they can sell and redistribute them for
(i.e., importers).
But enterprises on the supply chain can make a difference. One avenue is through
invoice financing. At Incomlend, we measure our commitment to environmental,
social, and governance (ESG) through our varied impact on the sustainable
development goals of the United Nations for 2030.
Most people have seen the SDGs. While it has become increasingly popular for
organizations to say they target the SDGs, for many this is only lip service.
The fulfillment of their business goals does not actually contribute to certain
SDGs – they just vaguely mention them.
With the goodwill that can arise from affecting social change, it’s easy to fall
into the trap of only having a loose connection to the SDGs. But we have so far
successfully avoided this pitfall. While Incomlend arguably addresses more than
a handful of SDGs, the business makes a substantial impact on each one.
To showcase this impact on SDGs – by extension, our commitment to ESG – it’s
important to illustrate how we work on several of them.
SDG 5 – Gender equality – It’s difficult for any business owner in the supply
chain to receive financing. It’s even more difficult for women-led businesses to
receive financing. This should, of course, not be the case. Women deserve equal
access to financing, if not more so, to make up for the historical disparities
in financing between genders.
Unfortunately, traditional financing methods put women at a disadvantage. Most
are people- and process-driven, such as trying to obtain a bank loan. The person
will have to come in, submit their necessary paperwork, and wait. Because bank
financing is so relationship driven, the process is easily prone to bias –
either in favor of men or even against women, – that altogether reduces the
number of women who raise money.
Invoice financing breaks this glass ceiling. Because invoicing platforms are
largely automated, they minimize bias. Importers or exporters just upload their
necessary requirements on the platform and they can have cash in hand in as
little as 48 hours. By reducing the opportunity for bias, invoice financing can
provide more working capital to women-owned or -led businesses.
Incomlend strongly believes in gender equality, which we try to make evident in
our very workforce. Across the entire company, 33% are women. This notably
increases at the management level, where a full 40% of department heads are
women. By having a
SDG 8 – Decent work and economic growth – The economic outlook for 2023 is
bleak. The world may face a recession, and as businesses on the frontlines of
global trade, importers and exporters may suffer the most. This problem will be
exacerbated by the fact that – in addition to having a hard time obtaining
financing – they will often struggle with cash flow as it is. Exporters, for
example, may have to wait as far out as 120 days to be paid for goods that they
sent out immediately. These business practices ensure that cash flow will be
tight, which will make it difficult for these enterprises to grow.
Invoice financing provides these importers and exporters an avenue for much
needed working capital. Exporters can upload an export receivable and get paid
immediately, rather than having to wait three or four months for payment.
Importers can also benefit: After uploading the export receivable of a trade
partner, this exporter will be paid immediately, and the importer will have up
to 90 or 120 days, depending on the terms, to pay back the platform.
In both importer- and exporter-led invoice financing, businesses gain crucial
working capital. While this can be used for a variety of purposes, including
everything from hiring more staff, purchasing more products, and expanding into
new markets, they will have one ultimate impact: They help these businesses
grow, which creates jobs and contributes to the economic growth of their
sub-sector within the supply chain.
SDG 12 – Responsible consumption and production – Many mistakenly interpret this
SDG to only apply to how things are made, but it also applies one step before
that: how things are financed. In short, the supply chain industry must make it
a point to provide sustainable financing to importers and exporters.
Unfortunately, this is not the case. Most bank loans, for example, place onerous
terms on importers and exporters, which keep them trapped in a cycle of debt. In
some cases, these bad loans may put businesses in such a precarious financial
position that they go bankrupt. Some even lose assets when the loans are
collateralized.
Businesses do not only deserve financing – they also deserve fair financing to
help them produce and distribute products. Invoice financing presents this very
option, as the requirements, fees, and terms are all extremely fair – some would
even go so far as to call them business-centric. In this way, Incomlend
contributes to the responsible production of goods across the supply chain
creating social impact.
As we can see from these three SDGs alone, invoice financing is an avenue to
create social impact. By congregating on a platform like Incomlend, importers,
exporters, and investors do not only participate in transactions – they
transform the supply chain for the better.
Read more
February 7, 2023
ACCESSIBLE FINANCE: WHY INVOICE FINANCING IS WITHIN YOUR REACH
At US$1.7 trillion, the finance gap is astounding. Businesses are simply not
getting the capital they need to sustain and grow their businesses. Part of the
reason for this shortfall is where they are trying to access their capital.
Because banks are the financial institutions around which most businesses are
built, enterprises in need of funds most often seek bank loans. These are
notoriously inaccessible for a variety of different reasons. The first is the
requirements themselves. Banks, because they operate in a highly regulated
industry, will demand prospective borrowers furnish a litany of requirements,
including everything from extensive financial information to trade references.
These requirements are couched into a process full of red tape. Businesses not
only need to submit these requirements, but they have to go through multiple
back-and-forth sessions with the bank. There is, in short, plenty of red tapes.
This would all be fine if most businesses walked away with capital from the
bureaucracy, but such is not the case. The businesses who are turned down for a
bank loan will have just wasted time that they could have better spent on
seeking more accessible financing or growing their business. This problem is
compounded by the fact that there may be macroeconomic forces, such as a surge
in COVID-19, that makes working capital even more important.
Because bank loans can be difficult to get, many business leaders assume that
this holds true for all forms of financing. But such is not the case. Invoice
financing, for example, can be more accessible than bank loans by leaps and
bounds. At Incomlend, we make it a point to extend financial inclusion to more
businesses in need of capital. Central to this mission is market education:
Since many people have misconceptions about financing in general and invoice
financing in particular, it is our role to provide them with advice. To this
end, we want to show that invoice financing is more accessible than they may
think. Invoice financing, in other words, is well within their reach, should
they prepare the proper requirements.
Collateral-free financing
Unlike banks, which usually require some form of collateral, invoice financing
is a form of collateral-free financing. In other words, no form of collateral is
required by either trade partner. Our solution doesn’t require collateral, and
goes off-the-balance-sheet because it doesn’t figure as a loan. Invoice
financing is thus ideal for companies that do not want to over-leverage
themselves with debt.
Book a free discovery call
Geographic Eligibility
We are happy to work with businesses in certain markets around the world. These
are some of the supplier countries we cover:
* * Singapore
* Hong Kong
* China
* India
* Bangladesh
* Pakistan
* Vietnam
* Malaysia
* Indonesia
* United Arab Emirates
* Latin America
While we are especially eager to work with businesses headquartered from these
countries, or who have a trade partner operating from one of them, we also work
with other markets.
Trade History
To obtain invoice financing on a particular receivable, the trade partner cannot
be new. In other words, the importer or exporter must have an existing trade
history with this partner that pre-dates the receivable that they wish to factor
in. There is a minimum of one year of doing business with one another, which
provides a clear track record that makes it easy to render a decision on the
organization’s eligibility for invoice financing.
Goods
Incomlend is industry-agnostic, save for perishable goods, dangerous goods, and
coal. We work with businesses across a whole range of industries, including
everything from apparel to healthcare. As such, we welcome applications from a
variety of industries. On our eligibility form, businesses can identify as being
in apparel, automotive, construction, chemicals, electronics, healthcare,
manufacturing, metals, packaging, or fast-moving consumer goods. If the business
does not fit into any of those categories, it can simply list “other.”
By being industry-agnostic, we have a greater chance of helping all the
businesses in the supply chain in need of working capital.
Revenue
Many bank loans are accessible to only the largest of businesses. At Incomlend,
there is a broader range of businesses to that we can provide invoice factoring
– again because we want our services to be as inclusive as possible. To this
end, our eligibility form has several tiers of revenue that businesses can
classify themselves into, and we make case-by-case decisions for both importers
and exporters.
Upon submitting the information above on our eligibility form, importers and
exporters should hear from our team soon, who will provide a decision based on
the information submitted.
Importers and exporters who are approved for Incomlend enjoy a user-centric
experience as it comes to actually obtaining the working capital they need. Upon
approval, these businesses can proceed to Incomlend, submit the export
receivable that they wish factored, and then get their money within 48 hours. If
they are an exporter, it will be their export receivable that is paid. If they
are an importer, it will be the export receivable of their trade partner that is
paid, and then the importer gains up to 90 or 120 days to pay the value back,
depending on the terms.
As can be seen from the requirements and process listed above, invoice financing
is very accessible for importers and exporters in the supply chain. Businesses
would be wise to try this form of financing to obtain the working capital they
need, so they can grow exponentially.
Enquire now about our financing solutions: book a free discovery call with our
experts.
Read more
February 1, 2023
EXPERTISE AT INCOMLEND: HOW WE MAKE INVOICE FINANCING WORK
In fintech, there are many platforms that are made by what you could call
mercenaries. In other words, these business leaders primarily built the business
to seize upon a financial opportunity that they recognized in the market. In all
likelihood, they want to scale the business, gain the expertise and eventually
flip it to another larger corporate buyer.
These types of business leaders often have technological skills and business
acumen, but they lack the deep domain expertise to truly solve their space’s
problems. Domain expertise is necessary, after all, to build a solution that is
customer-centric.
This is not the case at Incomlend. Since the company’s founding in 2016, the
organization has amassed a wealth of talent. These are not just engineers, and
these are not just salespeople. There is a concentration of domain expertise
related to the four areas that are necessary for a truly customer-centric
invoice financing platform: supply chain, financing, investing, and technology.
By documenting our expertise, we hope to convey to potential users of Incomlend
that this is a trusted invoice financing platform, owing to the fact that we
understand the problems of our users and we have the skills to address them.
Supply chain
Mastering the supply chain cannot happen overnight. Many of the team at
Incomlend has experience working in the supply chain of larger corporations, or
even at importers and exporters. As a result, we understand their pain points,
most especially as it relates to working capital. Both sides of the supply chain
are locked in a push-pull battle for working capital that harms both parties.
Although they deliver goods immediately, exporters may not be paid for as long
as 90, 120 days and sometimes even more. This makes their working capital highly
cyclical – there may be periods where they are flush with cash and periods where
they are severely lacking, due to the cadences of these long payment periods.
The same goes for importers, who may need capital to pay off their trade
partners.
At Incomlend, there is a deep understanding and expertise of the struggles in
cash flow that both importers and exporters face.
Financing
The team at Incomlend are not just experts in invoice financing but in all
financing. There is strong knowledge, in particular, about bank financing and
the associated challenges that come with it for small/medium businesses. When
seeking trade finance through a bank, most importers and exporters struggle. To
begin with, the requirements are substantial – the amount of paperwork required
would trouble even a large corporation. The terms may also be highly in favor of
the banks, such as requiring collaterals.
Even in the few cases where enterprises meet these requirements, there is a high
opportunity cost. They may need to wait as long as several months for their cash
to arrive in their account. In the event they are not approved, all that waiting
has now amounted to a large opportunity cost: The time they spent applying could
have been used for other means of enhancing their financial position.
The Incomlend understands the inaccessibility of bank financing, which
strengthens the team’s resolve to make working capital more accessible.
Investing
An invoice financing platform cannot work with only importers and exporters. For
an invoice financing platform to work, there need to be investors who are
willing to finance invoices. For there to be investors, the platform must take
into consideration their unique needs, so they will be attracted to provide
financing on your platform versus others
Incomlend understands the needs of investors, as many of our team members come
from retail or institutional investment backgrounds. This is reflected in our
platform and through our expertise. Investors who sign up have high flexibility:
They can choose whether to invest in receivables or groups of receivables and
when to do so. As a result, they gain access to a risk-adjusted asset class that
can offer stable returns.
Because Incomlend understands the needs of investors, they will not be in short
supply on the platform. There will be enough importers, exporters, and, most
crucially, investors, for the ecosystem to continually succeed on a day-to-day
basis.
Technology
While most mercenaries approach platform-building from a purely technological
perspective, the importance of innovative technology should not be discounted.
The team at Incomlend shares this belief. Our tech team at Incomlend is composed
of many talented engineers, web developers, UI/UX specialists, data scientists,
data analysts, and another technical talents.
The calibre of our tech team is evident in the product itself. While it would
have been very easy to make a complex product – since enterprises are accustomed
to bloated software – the team made a platform that is arguably as easy to use
as any mass-market consumer product. For instance, importers and exporters can
inquire about their eligibility with a few easy clicks. When they are approved,
they can just upload the documents required along with the receivables that they
wish to factor in. This ease of use is as much a philosophy as it is
product-driven: One of our missions at Incomlend is to make it as easy for
businesses to obtain the working capital they need. This mission can only be
accomplished through intuitive design, scalable engineering practices, and
innovative features.
Through the unique combination of expertise in the supply chain, financing,
investing, and technology, the Incomlend team has quickly built a platform that
truly speaks to the unique needs of customers.
Read more
January 17, 2023
WHY SOME BUSINESSES MAY WANT TO CONSIDER INVOICE FINANCING OVER BANKS
When businesses are in need of financing, they usually choose between several
options. These range from more traditional channels, like bank loans, to more
recent innovations, such as invoice financing platforms.
Despite what some lenders may say, no solution is categorically better than
others. Each has its own merits depending on the needs of the organization.
Business leaders are mistaken in looking for the best financing solution – they
should be searching for the best financing solution for them.
The operative words in that sentence are “for them.” Choosing a financing source
is as much an internal search as it is an external one: business leaders should
examine their strategic goals, key metrics like working capital, operational
history, and other variables. This self-analysis will enable them to choose the
financing solution that makes the most sense for their organization.
To help business leaders make the best choice, we have compiled several reasons
why some business leaders may want to consider invoice factoring as an
alternative to bank financing. Founded in 2016, Incomlend is a global leader in
invoice financing for trade finance, so we are deeply familiar with the pros of
this financing method vis-a-vis banks.
For your consideration, they are these:
1. Bank loans may not be as readily available as invoice financing.
Contrary to what some media portray, a business owner cannot just walk into a
bank and request a loan. He will usually need a long operational history with
the bank in question. Requirements will vary per market, but they may include a
minimum number of years of maintaining accounts there, a minimum maintaining
balance over this period, minimum revenue, and other such needs.
Because most businesses maintain only a few bank accounts, they will naturally
have only a few financing choices, assuming they even meet the requirements. If
the business owner does not like the terms offered by a bank, he is in tough
luck. He may not have the financial history with another bank to draw a
competing offer.
In contrast to this approach, a business seeking invoice financing can directly
check its eligibility with the invoice financing platform. So long as the
business meets all the requirements, they can avail of invoice financing – there
is no need to have a long historical relationship with the platform as banks
often demand, even though some trade history between the trade partners is
required. This makes invoice financing arguably more accessible than bank loans
for some organizations.
2. Bank loans take longer to acquire than invoice financing
As banks operate in a very traditional industry that is highly regulated, the
process of obtaining a bank loan is understandably very intensive. The process
will of course vary from bank to bank, but generally speaking, the time-to-money
(from application to disbursement) can last up to several weeks or even months.
Invoice financing operates on a much quicker timeline. After submitting their
eligibility requirements and getting approved, provided that both parties are
responsive in submitting the documentation needed, an importer or exporter can
then upload the export receivable that they wish factored. Within as little as
two days from invoice upload, the enterprise can have cash in the bank.
The significantly quicker time-to-money process with invoice financing is not
just a matter of convenience. Businesses in need of capital do not have the
luxury of time. Getting cash sooner means that they can deploy it to more
productive use sooner, whether that means re-investing in their business, or
using it for revenue-generating activities.
3. Invoice financing protects your business reputation.
Apart from the requirements documented above, another common task of bank loans
is trade references, often from customers of the business seeking a loan.
This requirement may represent a business risk for the importer or exporter. The
first is reputational: other organizations may be wary of a business that seems
unstable by virtue of its seeking a business loan.
Bad partners may use this to their advantage. Importers and exporters negotiate
on terms all the time, as customers and vendors. If the importer knows that the
exporter is pursuing a bank loan because they were asked to serve as a credit
reference, the importer can use this to their advantage at the negotiating
table. The importer could pressure the exporter into accepting worse terms,
knowing that they are experiencing a financial crunch of some kind.
Invoice financing, in contrast, does not expose enterprises to either of these
risks. They do not need to harm their business reputation by making others aware
they are pursuing capital. As a result, they do not come to the negotiation
table at a disadvantage.
Invoice financing, in fact, creates more collaborative relationships between
importers and exporters. In the case of importers, for example, they do not have
to delay payments to their partner exporter in an effort to preserve their own
working capital. With invoice financing, their partner is paid immediately, and
the importer is tasked with paying back the platform. This preserves their
working relationship and may even provide benefits to the importer, such as when
they need special requirements or favors from their export partner.
The decision is yours
Again, there is no right or wrong option for businesses choosing between bank
loans or invoice factoring. There may be businesses better suited for bank
loans. If, on the other hand, an importer or exporter does not have an existing
financial history with a particular bank, needs their capital much sooner than a
timeline of weeks or months, and wants to be spared the business risk that comes
with asking for credit references, invoice financing may be the best option.
Read more
January 11, 2023
BETTER TERMS, BETTER BUSINESS
Why businesses must think beyond sales and revenue
Although a contract between an importer and exporter can span dozens of pages
and include hundreds of different items, the supplier tends to focus
disproportionately on one: the sales price. From this sticker tag, the importer
can calculate the gross profit on this particular deal and the net profit.
Paying close attention to these figures—the sales price, the gross revenue, and
the net revenue—is of course crucial. Overlooking these numbers will cause any
organization to quickly go out of business. The issue is that most exporters
concentrate solely on these figures at the exclusion of equally important
measures, such as payment terms.
The focus on just a handful of figures is rooted in the fact that contracts are
driven primarily by salespeople. Since their performance and incentives are tied
purely to the business development figures mentioned above, they naturally put
all their resources into negotiating the highest possible sales price. These
salespeople will try not to budge from a given price and instead upsell
importers with additional goods, lock them into more business, or find other
creative ways to charge more.
While these efforts are well-intentioned, the problem with these charges is that
they are just that: charges. These sales exist only on paper until an exporter
collects, which can be a difficult task. On top of having to deal with terms
that are inherently favorable to the importer (with payment terms lasting up to
several months, even though goods are delivered immediately), the exporter also
has to contend with late payment or non-payment. Blank swan events, like
COVID-19, can push importers to further hold payments to suppliers, even though
cash flow during these incidents affects everyone, not just them.
From this vantage point, it would not be unreasonable to view the sales and
revenue figures for exporters as almost a vanity metric. A vanity metric is a
measure that professionals may meticulously track and celebrate, even though it
may make no meaningful difference to the business. For an eCommerce website, a
vanity metric may be pageviews, if those site visitors are not ultimately
converting into customers. For a SaaS business, a vanity metric may be users, if
few signups are using the product beyond the initial registration.
In much the same way, one could argue that the business-development figures in
the supply chain are also partly vanity metrics because they don’t give a full
indication of business success. An exporter, for example, could be posting
record sales and revenues on paper, but the business reality could differ
dramatically. If any of those transactions are done with importers who have
negotiated favorable payment terms, tend to pay late, or even worse, meet both
of these conditions, the exporter with the all-time sales may actually be cash
poor.
With little working capital, the business may eventually be unable to fulfill
some of those orders, which will cause the business to come crumbling down. Some
importers may cancel their orders due to late delivery of goods, others will
switch to other suppliers, and still, others may hold the exporter financially
or legally responsible for the goods not being delivered on time. The operative
word in vanity metrics is vanity: They may make business leaders feel good in
the short term, but they merely cover up deeper, more serious problems that are
bound to emerge in the medium- to long term.
A finance-driven approach to business development
To succeed, businesses should not only take the lens of business development
when striking deals with importers – they must also carefully evaluate each
contract with finance in mind. This process should be done collaboratively:
Rather than just asking an exporter’s salespeople to also consider finance
metrics, exporters should bring in finance professionals to weigh the pros and
cons of each deal. Since working capital is integral to any business, the metric
that finance professionals will likely pay the most attention to is the payment
terms. Simply put, they will advocate for as much of the money as soon as
possible. The finance team may ask for some capital to be paid up front as a
downpayment, and the rest to be paid within a much smaller window than is
customary.
This is what the exporter’s finance team will request, but not what they will
necessarily get. The importer faces the same business demands as the exporter:
They also have to closely guard their working capital. To free up cash flow, the
importer will naturally push back against the shorter payment terms in favor of
a longer window. This is the friction inherent to any exporter-importer
relationship: For the exporter to win (i.e. get shorter payment terms), the
importer must lose (i.e. pay more capital sooner). For the importer to win
(i.e., get longer payment terms), the exporter must lose (i.e., get capital much
later). In this old model of the supply chain, importers and exporters are
placed at odds with one another in a zero-sum game. , which sadly often includes
bad actors who may outright lie for a better negotiating position.
In an environment with directly oppositional goals, the exporter will
undoubtedly secure some wins. A handful of importers may agree to shorter
payment terms, with some even conceding to some form of upfront payment. But
counting on all importers to agree to pro-importer terms is not only unlikely
but also a significant waste of resources. Exporters will have to commit more
talent to negotiating these shorter payment terms and spend more man-hours going
back and forth throughout the process.
In the end, this resource-intensive process will make a negligible difference,
since few importers will agree—they hold most of the leverage, after all, as the
buyer. In the event they do agree, there is no telling whether they’ll follow
through. Just as importers frequently do not comply with longer payment terms,
they can just as well not comply with shorter payment terms, electing to pay
much later than what was agreed upon. In this scenario, the exporter is even
worse off as a business, as rather than just adopt the customary terms, they
wasted additional resources negotiating for pro-exporter terms that were not
followed through in the end.
There is a better way than importers and exporters taking opposite sides of the
proverbial negotiating table. Through the innovation of invoice financing, the
two parties no longer have to be in opposition to one another when it comes to
payment terms. Removing this friction, they can focus on collaborating with one
another to grow the business overall rather than haggling back and forth.
This idea sounds almost too good to be true, but the way it works is simple.
Let’s examine invoice financing from the exporter side. As usual, the exporter
ships their goods to the importer, and then the process diverges from here. In
the legacy process, exporters will have to deal with waiting for 120 days for
the export receivable to be paid, meaning they’ll simply have to contend with
less working capital until then. With an invoice financing platform, in
contrast, exporters can be paid upfront in as little as 3 days. Even though the
benefits to exporters are enormous, the transaction is fair: The export
receivable is paid up to as much as 90% of its face value, and the invoice
financing platform takes a small fee for its role).
By using an invoice financing platform, exporters increase their working
capital, which is as important to the success of the listed sales and revenues,
if not more so. With greater cash reserves, exporters can partake in more
activities that grow the business, rather than simply bide time until the next
export receivable is paid. Exporters can strive for economies of scale by buying
more raw materials, so they can produce goods cheaper. Exporters can canvass for
more partner importers, who will again be easier to work with since the presence
of an invoice financing option makes each deal collaborative rather than
competitive. Exporters can explore new product categories to diversify their
catalogue for partner importers.
Invoice financing, in short, is a useful instrument. This innovation forces
exporters to see deals not only in terms of sales and revenue but also in
payment terms. By dramatically reducing the window in which they are paid,
exporters can benefit from a simple formula: better terms, better business.
Read more
January 3, 2023
WHAT THE COVID-19 SURGE IN CHINA MAY MEAN FOR THE SUPPLY CHAIN
COVID-19 cases are once again surging in China. On December 30, the World Health
Organization (WHO) even met with Chinese officials from the National Health
Commission and National Disease Control and Prevention Administration to discuss
strategies to deal with the increasingly dire situation.
While both groups are understandably treating the resurgence of COVID-19 as a
public health crisis, the problem could also spiral into being an industrial
problem, as occurred with the first outbreak.
In early 2021, when COVID-19 first took hold of China before quickly spreading
to the rest of the globe, the world faced one of the greatest disruptions in the
supply chain in modern times. Most importers, exporters, and other enterprises
in the supply chain were caught flat-footed: They went into crisis management
mode, doing their best to get their goods or raw materials where they needed to
be, with mixed results.
As COVID-19 once again threatens China, businesses should be better prepared.
Here is how the COVID-19 surge in China may affect the global supply chain and,
more importantly, what businesses can do to ensure the continuity of their
supply chain.
Negotiating power shifts to exporters
In normal market conditions, the negotiating power between exporters and
importers is with the latter. Importers are the customers, after all. If the
situation in China continues to worsen, this power will shift to exporters. This
is due to the law of supply and demand.
As it did during the first pandemic, China may take increasingly draconian
measures with businesses and localities, such as shutting down borders, limiting
outbound shipments at ports, and even preventing residents from leaving their
homes and thus reporting to work. These measures would severely limit the number
of goods available for export.
As the world’s largest exporter since 2009, China is known as the world’s
factory, exporting 3.2 trillion worth of manufactured goods in 2021 alone.
Viewed the opposite way, there are many importers who rely on Chinese goods and
raw materials for their business. In a situation where these goods become
scarce, exporters can pick and choose which importers to work with. They will
naturally choose those importers that are better payees, rather than those who
still request the long payment cycles.
Because importers will also be feeling a crunch in working capital, these
businesses cannot simply pay their partner exporters immediately. One solution
that offers a middle ground is invoice financing. With invoice financing,
importers can upload an export receivable to get the exporter paid immediately,
which will make their business relationship a priority even when the supply of
goods is low. The importer then has a longer window in which to pay back the
provider, which preserves their own cash flow.
Delays can be mitigated but not prevented
Even the best-prepared business will face disruption from a rise of COVID-19
cases in China. There will be delays in the shipments of goods and raw
materials. Importers will have to find ways to adjust, such as by stockpiling
products and components ahead of time, advising clients and customers of coming
shortages, or even rationing out their products to end users.
But perhaps the best way to navigate this inevitable disruption is through
communication. Importers will need to communicate with their partner exporters,
so they can understand what delays will occur and plan and strategize
accordingly. When faced with such a great disruption, exporters will be focused
on restoring their own supply chain and may not have time to regularly
communicate with their downstream partners. As with every business, exporters
will naturally prioritize the importers they believe are important customers, as
part of a key account management strategy.
Most importers will not belong in this category. They may have negotiated
payment terms purely in their favor. Or worse, they may be frequent late payees
or even non-payees. The few importers who regularly pay on time, such as through
invoice financing, will remain in the good graces of Chinese exporters and be a
strategic priority. These enterprises will get regular updates, which provides
them with the second most important resource in any supply chain disruption,
after the goods themselves: information.
Supply chain diversification will become multidimensional
When the COVID-19 pandemic surged throughout the world, many business leaders
called for supply chain diversification. When referring to the need to diversify
the supply chain, they were mostly talking about the locality.
At the national level, some were calling for businesses to choose additional
suppliers outside China, so their base for goods and raw materials does not fall
on one country, especially one that proved to be as susceptible to a crisis as
it did. At the partner level, some were calling for businesses to diversify
their partner manufacturers, suppliers, and exporters, even if they still mostly
reside in China.
Both of these measures would derisk an organization, but only to an extent. To
truly make a supply chain resilient, businesses need to think beyond only
geography. In fact, the enterprises that will be able to best weather another
supply chain disruption in China are those that diversify their business along
multiple dimensions.
One important dimension to not overlook is the financial one. Importers should
not have only one payment option for dealing with exporters. Relying on working
capital to pay their partner exporters, at a time when cash flow may already be
tight due to the looming recession, is a recipe for disaster. By diversifying
their finance options to include invoice financing, importers can strengthen
their financial position as it comes to working capital. Doing so is arguably as
important as diversifying their partner exporters and their locations: Diversely
located partners will not mean anything if there is no cash flow with which to
pay them, after all.
In the end, the COVID-19 situation in China may continue to worsen, up to the
point that it creates a major supply chain disruption like the previous
outbreak. Since China is the world’s largest exporter, importers in particular
need to be better prepared for this possibility. One means of preparation is
invoice financing. By turning to invoice financing for some or all of their
receivables, importers may improve access to the limited goods or raw materials
that suppliers have to export, become a key clients for exporters when supply
chain information is tantamount to agility, and diversify their supply chain
along multiple dimensions. These importers will still no doubt be affected, but
they can use this moment to once again revitalize their supply chain.
Read more
December 28, 2022
HOW INVOICE FINANCING CAN HELP IMPORTERS IN THE UNITED STATES
The hyper-competitive imports market in the United States
American culture is commonly portrayed as one centred around consumerism. This
image may be rooted in objective reality: The United States is the number one
importer in the world. In 2021 alone, the United States imported US$3.4 trillion
in goods. Among the most popular categories were industrial, automotive, food
and beverage, consumer, and capital goods.
American imports, in short, are a booming business. While the success of this
industry as a whole is beneficial for the nation as a whole, it presents a
challenging business environment for individual importers. Take the example of
an importer of apparel. In a smaller market, the importer would have
significantly less competition, so they would have greater leverage in
negotiating terms with exporters.
In the United States, however, there may be hundreds, if not thousands of other
importers in your city alone. These importers implicitly compete with their
peers on price, volume, and other factors when negotiating with exporters.
In a hyper-competitive business environment like this one, American importers
should search for every possible advantage. Because it would be difficult to
continually negotiate with exporters – if you are not willing to buy their
products on market standard terms, another importer will – it’s crucial to seek
competitive advantages through other channels.
One such example is the opportunity presented by invoice financing platforms.
These invoice financing platforms can provide numerous benefits to American
importers. The most obvious is more favourable payment terms, but the use of an
invoice financing platform can also provide deeper more strategic benefits.
The benefits of receivable financing for importers in the United States
Gain a longer time horizon for payments
The terms between each trade deal of an importer and exporter may vary. After
the exports are shipped to an importer, the latter may have anywhere from 2
weeks to 90 days to pay the balance, depending on what was negotiated between
the two parties. An invoice financing platform can dramatically extend this
runway all the way up to 120 days.
Achieving this runway is also easy. All the American importer has to do is
upload the exports receivable that they want to be paid. The invoice financing
platform will pay the partner exporter immediately, and in turn, the importer
will have a full 120 days to pay back the provider.
By enjoying more favourable payment terms, the importer gains significantly more
working capital. This working capital can be used for more revenue-generating
activities, such as importing more products with the importer, striking deals
with other importers, or even investing into its sales and distribution network
in the United States. The invoice financing platform enables not only better
payment terms, but greater business results.
Maintain positive business relationships
Importers and exporters often have conflicting goals. Importers want to extend
payment terms as much as possible, while exporters want to shorten them.
Importers want to get their goods immediately, while exporters want to ship them
out only after receiving some type of payment. Importers want to delay paying a
balance as long as they can, while exporters want to collect as soon as they
can.
These conflicting wants often strain a business relationship. When an importer
regularly delays payment out of necessity, sometimes even beyond the agreed-upon
terms, the exporter may write off that business as a bad payer. If delayed
payments happen often enough, which is a common case, given that importers need
to manage their cash flow as well, exporters may seek corrective action.
In dealing with a bad payer, the exporter may limit the volume and type of
products they send to the exporter, or even choose to cut them off altogether,
refusing to do further business. This type of strained or failed B2B
relationship with exporters will affect the business continuity of the importer,
who will now have to search high and low for another importer who can address
the same product gap, a feat that may be difficult depending on the product.
With invoice financing, in contrast, an importer will never have to go through
the rigamarole of alienating an exporter. Because the exporter receives payment
quickly for every export receivable by the invoice financing platform, the
importer maintains positive relationships with the business leaders and
collections team of the exporter. As a result, both parties can focus entirely
on addressing the trade gap the imported products fill.
Enjoy more discounts and other benefits
When thinking about invoice financing, importers tend to overlook how these
platforms will help exporters, which will also ultimately benefit them. Most
importers in the United States do business with exporters in the Global South,
in countries such as India, Bangladesh, Malaysia and Vietnam. These countries
are emerging markets, and the exporters operating from them tend to be micro,
small, and medium-sized enterprises (MSMEs).
In the current legacy system, MSMEs struggle with cash flow. Although they tend
to send out products as soon as an order is received, they may not be paid for
up to 120 days. As a result, the working capital of exporters is always
fluctuating, and it’s difficult to make strategic plans that grow the business,
as that requires a steadier cash flow.
Invoice financing platforms help these exporters. After shipping out their goods
and uploading their export receivables to the invoice financing platform, the
business can have cash in the bank in as little as 48 hours. The exporter will
be paid as much as 90% of the face value of the export receivable, with the
invoice financing platform taking a small fee for its role.
Because these exporters can now control when they are paid, they can more easily
plan, invest, and execute business activities that grow the business. For
example, with the additional capital, an MSME can purchase raw materials in
higher volume, diversify its product offerings, or even invest in equipment or
infrastructure that will drive greater efficiencies.
When the exporter in the Global South grows into a larger business, they have
more to offer their partner importers in the United States. These benefits
include everything from discounts on imported products to a greater selection to
choose from. Invoice financing, in short, does not only work in the favor of the
American importer: It helps the exporter grow to the point that it can offer
even more value to their trading partners in the United States.
Simplify financial planning
As mentioned earlier, the terms vary wildly without an invoice financing
platform. Depending on negotiations, importers may have very different payment
terms with each of their suppliers. Some might be 14 days, 30 days, 60 days, 90
days, 120 days, and every number in between. This variability of payment terms
is not only difficult to track (the standard terms of each importer will need to
be documented somewhere), but it makes financial planning chaotic.
When payment terms have such high variability, the finance team needs to be
laser-focused on accounts payable on a weekly basis, balancing the need to
maintain working capital with the need to meet exporter payment terms. This
function is resource-intensive, taking valuable time away from finance officers
that could otherwise be spent on more valuable business activities.
Invoice financing alleviates finance teams of this burden. When payment terms
are standardized to a universally set 120 days, finance teams can necessarily
spend less time scrambling on accounts payable on a week-to-week basis. Their
payment cycle, after all, now runs on a 4-month cadence. With the time saved and
the working capital gained, finance teams can permanently take a longer-term
view of their organization’s financial planning. They can focus on deploying the
capital to the mid-to-long-term business activities that will grow the
organization.
Choosing invoice financing as an importer in the United States
While the United States is the foremost economy for importing in the world, this
economic climate presents key challenges for individual importers. As there are
only so many trade-offs that importers can negotiate with their partner
exporters, importers need to seek more innovative solutions in order to more
successfully complete.
Invoice financing, in particular, gives importers a longer payment horizon,
which strengthens their relationship with exporters, makes it easier to plan
revenue-generating business activities in the medium- to long-term, and even
opens the door to discounts and other benefits, as their partner exporters can
also more easily grow when the platform pays them immediately. Clearly, invoice
financing should be an option for importers in the United States who wish to
innovate.
Embarking on any new initiative – even one as beneficial as invoice financing
may be, is always daunting. To make this easier for importers, Incomlend has
proudly partnered with CMA CGM, a leading shipping group that operates in 420
ports across 160 countries using 257 shipping routes. As part of this
partnership, Incomlend offers special rates to any of CMA CGM’s clients. This
offer is meant to make it easier for enterprises to experience first-hand the
value that invoice financing can bring to their organization.
Read more
December 9, 2022
THE KEY TO COMPETITIVE ADVANTAGE
As the world heads toward a possible recession in 2023, one of the industries
that may be disproportionately affected is the supply chain. When the gross
domestic product (GDP) falls, enterprises import, export, and trade fewer goods
as a result.
In this kind of economic environment, enterprises in the supply chain generally
take one of two approaches to handle the shortfall. Some will institute a hiring
freeze across the organization, making exceptions only for key talent that
drives revenue. Others will go back to the figurative drawing board, rethinking
their business strategy.
While both of these initiatives are necessary – enterprises absolutely should
reevaluate their hiring policies and business plans – neither should be the
end-all, be-all strategy for a recession. The key to competitive advantage
during these times is decidedly less exciting, as it’s not about tightening your
corporate belt through a spirit of grit and resilience or making savvy boardroom
deals that keep the company afloat. The key to surviving, if not thriving,
during any economic climate is simpler: working capital, which is the total
difference between a company’s current assets and its current liabilities.
Business leaders in the supply chain who focus on freeing up more working
capital for their enterprise can gain major competitive advantages. The
operative word in that statement is “can” since working capital is not in of
itself the competitive advantage, but the means to this end.
With working capital, an enterprise can invest in essential, revenue-generating
resources at a time when other organizations are cutting them back. They could
invest into technology that digitizes aspects of their business and creates
operational efficiencies. They could invest into infrastructure that helps their
business achieve greater economies of scale. They could invest in new strategic
hires that can generate exponential rather than incremental growth across
important business metrics. Such investments can produce a virtuous cycle, as
they can create more working capital that can be further reinvested to create
even more working capital, extending the competitive advantages of an enterprise
over industry peers even further over time.
This surplus of working capital is ideal, but achieving it may be easier said
than done. If a business leader looks to the typical line items on an accounting
spreadsheet, he will get the same results as everyone else. To free up more
working capital than competitors, business leaders need to look where only the
most forward-thinking enterprises are: invoice financing.
Invoice financing can help both sides of the supply chain produce more working
capital. The process for exporters is straightforward. An exporter ships their
goods to their overseas buyer as usual, but instead of waiting up to 120 days
for the export receivable to be paid, it can be paid upfront in as little as 3
days through an invoice financing platform. The export receivable will be paid
up to as much as 90% of its face value (the factoring provider takes a fee for
facilitating the financing), and the exporter can enjoy more working capital
sooner. If the exporter uses invoice financing for multiple transactions, the
business can quickly build a war chest that can be used for reinvesting into
important resources. Invoice financing for exporters is thus industry agnostic,
working in favour of brands in everything from garments and textiles to
pharmaceuticals.
The process for importers is also straightforward and equally beneficial.
Importers provide the invoice financing platform for the exports receivable that
they wish to be paid earlier. The invoice financing platform then pays off this
export receivable immediately with the exporter, and the importer in turn enjoys
much more favourable payment terms: They have up to 120 days to pay back the
full face value to the provider. This system maintains a positive business
relationship with their exporter compared to late payment or non-payment while
giving them more working capital to reinvest into their own business.
Invoice financing, in short, can be the best path to more working capital for
both importers and exporters. With more working capital, these enterprises can
focus on business activities that lead to growth rather than merely maintaining
operations like most of their industry peers during times of economic crisis.
Despite these advantages, enterprises may still be reluctant to try invoice
financing, given how novel the solution is.
For importers and exporters interested in exploring invoice financing, Incomlend
is here to help. As a top invoice financing platform – we were even recognized
as one of the fifteen fastest-growing companies in Singapore in a prestigious
annual ranking by The Straits Times and Statista in 2022 – we have plenty of
expertise and experience to share with your enterprise. Just reach out to our
team for a quick chat via the button below.
Read more
November 22, 2022
HEALTHCARE IMPORT/EXPORT: CHALLENGES AND SOLUTIONS
When it comes to healthcare import-export, there are specific facts you better
be aware of.
Global supply chain disruptions during the pandemic significantly impacted the
healthcare products industry. As a result, governments responded by implementing
policies to help support the import and export of medical goods and services.
According to the World Bank, these measures “increased average trade costs of
medical goods by about 60 percent.”
These effects continue today as the landscape for the global importing and
exporting of healthcare products still requires more significant measures to
mitigate supply chain difficulties.
To keep up with inventory management and economic challenges, healthcare
businesses, both for-profit and non-profit, like the IDA Foundation, need to
understand as much as they can about the importing and exporting of medical
supplies.
Medical Supplies Imported and Exported
Statistically, most of the import and export of medical equipment and medical
supplies wholesale fall into one of these categories of HS codes, 9018, 9021,
9022,9019, and 4015. Instruments, appliances, and apparatus are among the most
traded healthcare products globally.
What are the top imports and exports of medical supplies?
* 1. Medical, surgical, dental, and veterinary instruments, and appliances
* 2. Electro-medical apparatus
* 3. Sight-testing instruments
* 4. Parts and accessories for scintigraphic apparatus
* 5. Orthopedic appliances
* 6. Artificial body parts and teeth
* 7. Hearing aids
* 8. Crutches, belts, trusses, and splints
* 9. Bone plates, screws, and nails
* 10. Pacemakers
* 11. X-ray supplies such as x-ray tubes, x-ray generators, control panels,
desks, screens, and chairs
* 12. Mechano-therapy
* 13. Artificial respiration appliances & apparatus
* 14. Ozone, oxygen, and aerosol therapy
* 15. Vulcanized rubber articles of apparel & clothing accessories
Which nations rank first for importing and exporting healthcare?
According to a report from globalEDGE in 2019, imports and exports from USA
healthcare companies ranked first globally. China ranks second due to global
healthcare economies deciding to export medical devices to China.
Top 10 Healthcare Import Countries
* 1. United States
* 2. China
* 3. Germany
* 4. Netherlands
* 5. Japan
* 6. France
* 7. Belgium
* 8. United Kingdom
* 9. Italy
* 10. Canada
Top 10 Healthcare Export Countries
* 1. United States
* 2. Germany
* 3. Netherlands
* 4. China
* 5. Ireland
* 6. Switzerland
* 7. Mexico
* 8. Belgium
* 9. Japan
* 10. France
What are the difficulties of importing and exporting healthcare products?
Several factors have contributed to difficulties in the international trade
of medical supplies and other healthcare-related products. To import and
export medical devices, wholesale medical supplies, wholesale medical
supplies, and other healthcare products, businesses must be able to negotiate
an array of trade policies established by worldwide governments, including
tariffs, import costs, and rising energy prices.
The WTO, the World Health Organization (WHO), and the World Intellectual
Property Organization (WIPO) have been working together to address
difficulties associated with importing and exporting healthcare products.
These institutions explained in a joint statement, “International trade is
vital for access to medicines and other medical technologies, markedly so for
smaller and less-resourced countries. Trade policy settings — such as tariffs
on medicines, pharmaceutical ingredients, and medical technologies — directly
affect the accessibility of such products.”
For improvement to the international trade system to occur, countries must
work in cooperation, reduce tariffs and import fees, and improve their
transparency with their trade policies. In the meantime, healthcare
businesses must keep current on how this confluence of international policies
impacts their ability to trade worldwide.
How to manage cash flow and supply chain requirements
It can be challenging for businesses to manage their cash flow and meet
supply chain requirements. Often the cash flow of income received by accounts
receivable from customers and additional sources doesn’t align with the
schedule of payments going out of the account payable to suppliers.
Businesses need to develop a strategy for building sufficient working
capital. This cash reserve can bridge the gaps between lapses in cash flow
into the company.
However, managing supply chain cash flow in today’s economic conditions can
be challenging. For example, a company may not receive incoming payments if
its products haven’t left the shipping container due to port congestion or
delays. Unfortunately, the suppliers still expect to be paid on time.
When it may not be enough or feasible to generate a significant cash reserve,
businesses need to look to other methods to keep the cash flowing as steadily
into the company as it’s going out.
5 ways to increase cash flow to meet supply chain requirements
There are a few ways that you can increase cash flow so that your supply
chain can run smoothly. Consider these ways and which ones can benefit your
processes:
* 1. Engage in negotiations with suppliers
* 2. Factor invoices
* 3. Encourage customers to pay early
* 4. Consider taking out a small business loan
* 5. Invoice Financing
Engage in negotiations with suppliers
The first step in mitigating this cash flow gap starts with reaching out to
your suppliers. Most suppliers will work with businesses and negotiate for
extensions on your payment schedule.
It helps to be on good terms with the suppliers before communicating your
needs. Establishing trust in your ability to keep your end of the bargain can
facilitate working out a deal or extending your terms.
Factor invoices
Factoring can help with cash flow deficiency. Use online factoring services
to help make this process more efficient for your company and your customers.
Onboarding is usually easy and the process is speedy.
Encourage customers to pay early
Provide a discount or an incentive to encourage your customers to pay early.
Although not all your customers will agree to it, it’s worth the attempt.
Gaining these funds ahead of schedule can give your cash flow the boost it
needs.
Consider taking out a small business loan
Although it may seem like an extreme step, a business loan can bring in cash
flow now, when you need it. However, the process of applying for a small
business loan is not always straightforward as it may involve lots of KYC and
compliance checks. If you think this is the best option for your business,
you can create a short-term loan for only the amount you need to cover the
gaps in cash flow.
Exporters can benefit from Invoice Financing
As an exporter selling healthcare products and medical goods, did you know
you can benefit from invoice financing? When you sign up for invoice
financing, you’ll have 90% of the invoice value paid immediately after you
ship the goods. The outstanding 10% will be given back to suppliers once the
buyer has paid back the provider. This one simple step frees funds so you can
re-invest your money to pay your suppliers, compensate your employees, and
finance your next production cycle. As a result, you can scale up your
business faster and more efficiently. Learn more at incomlend.com.
Read more
November 3, 2022
IF YOU IMPORT/EXPORT GOODS, YOU SHOULD READ THIS
These days, the global economy is more competitive than ever before. This
creates a fast-paced environment where every second and dollar counts. These
factors, combined with the recent economic instability all over the world, have
caused many organizations to look for ways to cut costs and increase their
working capital.
But what is working capital?
Simply put, it is the total difference between a company’s current assets and
current liabilities. As an importer or exporter of goods, one of the best ways
to achieve this is through trade finance.
The overall trade finance meaning covers all kinds of financial products that
can be used to facilitate international trade. Trade finance products include
trade insurance and export factoring. Export factoring follows the same basic
principles as invoice factoring, except that it covers overseas transactions. If
you import or export goods, this article might be interesting for you to learn
about benefits that export factoring can have for your business.
Benefits For Importers
As an importer, one of your primary goals is to stabilize your supply chain.
With all of the recent upheavals, this has only become a bigger challenge.
According to a 2021 Statista survey, 57% of businesses cited supply chain
disruptions and shortages as one of their top challenges. Furthermore, from
January to November of 2021, $238 billion worth of cargo experienced
“significant delays” outside the ports of Los Angeles and Long Beach. Is your
organization prepared to handle delays like that? If your company already paid
in full for your shipments, you could lose thousands or even millions of
dollars. However, with invoice finance, this risk can be mitigated.
Instead of paying in-full at the beginning, invoice finance allows you to pay
for your supplies in gradual payments, up to 120 later, thus minimizing the
financial impact of delays in shipping.
Once you have made your purchase and the accounts receivable workflow has begun,
this process starts with cash being sent to your international suppliers within
three days post-shipment by your provider (this video explains the flow quite
well and in simple terms).
You then can pay for your imports up to 120 days later. The supplier will ship
the goods and issue the invoice. For international shipping, these goods will
often be shipped via shipping containers on large ships.
You can then check the invoice against related documents, such as the bill of
lading. This process can free up your working capital and ensures the continuity
of your supply chain. Your suppliers will appreciate the infusion of immediate
cash and this will strengthen your relationship with them.
That means, if you and your supplier get onboard for invoice financing, he might
also consider giving you additional discounts on your items!
But there’s more: this system can also be beneficial because it can improve your
competitive advantage by offering rapid payment terms to new suppliers. As you
can see, financing foreign trade can be a great way to achieve more efficient
working capital management.
Benefits For Exporters
Exporters sell goods to overseas buyers. Your goal is to cash in on these
exports as quickly as possible and expand your working capital. Unfortunately,
there are often delays that can cost your business. Research shows that 60% of
invoices are paid late. Specifically, South Africa, Mexico, and Australia tend
to pay around 26 days late. During the Covid Pandemic, the US and Canada paid
invoices punctually just 29.1% and 54.2% of the time. It is imperative that your
business have a way of weathering these kinds of storms. Nobody can predict the
next pandemic, but invoice finance can be an excellent way to stay prepared.
According to the provider you choose, you will get a certain percentage of your
invoice upfront. At Incomlend, for example, we fund 90% for exporters invoices
immediately after the goods have been shipped. Your buyers will then pay us with
extended payment terms. Finally, we will then pay you the 10% left from the
amount received after deducting our fees. With invoice factoring, you never need
to worry about payment collection because we handle it all for you.
Much like for importers, invoice factoring can help scale your business by
liberating working capital. This money can be used to better cover your
operational expenses and finance your next production cycle faster: paying
suppliers, employees, and so on.
Unlock Opportunities
Do you want to know more about invoice financing? Find out if your business
qualifies in a few clicks https://eligibility.incomlend.com/.
Read more
October 21, 2022
BANGLADESH EXPORTS: APPAREL SECTOR IN THE LEAD
Bangladesh’s exports have been growing exponentially over the last few decades.
While many may disregard this small, South Asian country, it’s home to over 165
million people that help export over $50 billion every year. While exports are
growing, so is the Bangladeshi economy.
This growth opens up even more possibilities for foreign investors. Whether you
want to trade locally or outsource your production, Bangladesh is the perfect
place.
Interested in learning more about the Bangladeshi export market? You’re in the
right place. Here’s everything you need to know about the import and export
business in Bangladesh.
Bangladesh
The People’s Republic of Bangladesh may not be the most popular country in South
Asia. However, with over 165 million people and a $400 billion GDP, the country
is slowly becoming a dominant player in the global export market. Bangladesh has
a thriving export market, with the majority of its imports being raw materials
to support the export business.
Bangladesh is in close proximity to major trading partners such as India and
China. This gives them the advantage to manufacture and distribute goods
throughout the world. This is because Bangladesh can leverage the same logistics
routes as India even though the local market is so much smaller in comparison.
This helps make the local manufacturing market a prime destination for clothing
and textile brands.
Local Manufacturing Market
As the second largest economy in South Asia, Bangladesh has a strong local
economy. The local GDP has been on the rise in the last decade, with estimates
showing that the country is on track to hit $1 trillion in GDP (PPP) in a few
years. The nominal GDP of the country is just below $400 billion, making it an
incredibly competitive market in the developing world.
The Bangladeshi Government has invested billions into local infrastructure and
education. This was to help revive and grow the local economy. However, the
textile industry is primarily responsible for the country’s expansion. The local
manufacturing market is so dominant that premium brands from around the world
want to work with local companies in the area.
Import Needs
Even though Bangladesh exports tons of finished products every year, the economy
is still heavily reliant on essential imports. While the deficit has reduced in
recent years, Bangladesh still relies on China and India for most of its raw
materials. Bangladesh’s biggest imports are energy and raw materials such as
cotton, woven cotton, and knitted fabrics.
As with many other South Asian countries, Bangladesh is also reliant on the big
economies of the world such as the EU and the United States.
The Bangladesh Export Business
The local manufacturing market in Bangladesh is incredibly efficient and
cost-effective. This allows Bangladesh to be the perfect manufacturing hub for
textiles and clothing. While Bangladesh exports over $50 billion every year,
almost all of this is due to the dominant clothing and textile industry.
Clothing
Bangladesh has some of the most efficient clothing manufacturing facilities in
the world. Much like China, the local manufacturing business has invested in
making production as cheap as possible. Along with low labour costs, this makes
Bangladesh the best place for Europe to outsource the production of its
clothing.
Textiles
While the clothing industry is dominant within the Bangladesh market, the
textile industry is not far behind.
This showcases the quality of production within Bangladesh. Unlike other
low-cost manufacturing countries, Bangladeshi companies still produce
high-quality clothing. This is what encourages premium brands to outsource their
production to Bangladesh.
Bangladesh Online Exports
While Bangladesh may seem like a low-cost manufacturing hub, the factories are
incredibly advanced. These companies have embraced the internet to allow people
from around the world to find and place orders completely online. This helps cut
down on costs while also reducing the time taken to close the sale.
Biggest Trading Partners
When it comes to international trade, the United States always takes centre
stage. However, Bangladesh trades more with Europe than America. In actual fact,
Bangladesh exports more goods to Germany alone than to the entire United States.
This massive export business is driven almost exclusively by fast fashion brands
like Zara and H&M.
Europe
While Germany does account for 16% of all Bangladeshi exports, 7.4% goes to the
United Kingdom and 7.1% goes to Spain. Bangladesh also exports tons of clothing
and textiles to countries such as Poland, Italy, Russia, Austria, France,
Denmark, and the Netherlands.
This means that wherever you are in Europe, you can effortlessly import products
from Bangladesh with ease.
Unites States
The United States accounts for only 15% of the total exports from Bangladesh.
While this is still over $7 billion every year, a majority of this is in formal
clothing. Over 30% of all clothing exported from Bangladesh to the United States
are men’s and women’s suits.
This is closely followed by men’s shirts, sweaters, and coats.
How Invoice Financing Can Help With Bangladesh Exports
The Bangladesh export business is massive. At the same time, the entire clothing
industry is so strong that companies from around the world are outsourcing to
local Bangladesh garment manufacturers.
When it comes to running a successful import-export business, invoice financing
can represent a great way to help your business scale. This is because factoring
services allow you to cash-in 90% of your invoices upfront, while the buyer pays
back the factoring provider up to 120 days later.
Incomlend is a Singapore-based fintech that can help improve your cash flow to
keep your business running, specialised in invoice financing for small and
medium-sized companies. If you export items overseas from Bangladesh, we can
help you. Find out your eligibility in one click!
Read more
October 14, 2022
HOW MUCH IS THE GEMS AND JEWELLERY INDUSTRY WORTH IN INDIA?
India is one of the world’s critical gems and jewellery trading growth markets.
In fact, did you know that from April to August 2022, export jewellery from
India reached a total of US$16,695.56 million? According to gems and jewellery
export data, this was 4.4% more than the previous year, with export values of
over US$15,991.68 million.
India’s dominance lies in the country’s affordable labour prices and quality
education. As a result, businesses also have easy access to highly qualified
workers.
In addition, it is a sophisticated diamond cutting and polishing hub. And
finally, local government regulations favour and promote the sector.
Gems and jewellery trading in India may soon be among the country’s most
profitable trade sectors.
Today, the world stands at the edge of a global economic boom in gems and
jewellery, and India’s poised to sit at the centre. This article provides
insight into India’s expanding gem and jewellery business, including artificial
jewellery export from India.
So read on!
Origins of Gems and Jewellery Trading in India
India’s traditional jewellery is beautiful and showcases the country’s cultural
and aesthetic history. The Indian jewellery-making practice has been around for
over 5,000 years.
India has also always been a leader in the gemstone trade, an ancient industry
dominated by everyone from the Moghuls to the findings of J-B Tavernier, a
French jewels merchant and traveller.
In fact, India was once the only place in the world selling gems—this early
trade spanned more than 2,000 years. Merchants worldwide came to the continent
to buy valuable Golconda diamonds, Kashmir sapphires, and Gulf of Mannar pearls.
And just as in the West, jewels signified the wealth, stability, and status of
those in the Indian upper classes.
The Museum of Gem and Jewellery Federation was founded in 2015 in Jaipur. This
“gems and jewellery in Jaipur” trading centre and museum safeguards valuable
items of national and historical significance.
Evolution of the Indian Gems and Jewellery Industry
The Indian gem and jewellery trading sector is bustling and fast-growing.
India is the world’s most significant source of trained, competent, and
adaptable workers, and deregulation-focused government policies encourage the
proliferation of all types of businesses. As a result, the Indian gem and
jewellery export industry contributes about 7% to the country’s GDP.
In 1966 the Gem & Jewellery Export Promotion Council (GJEPC) was set up for the
sector of gems and jewellery in Surat. One example is, they help traders with
how to export jewellery from India to the USA.
It helped (and continues to help) exporters expand their efforts to make the gem
and jewellery sector a powerhouse of India’s export-driven economy. Since its
inception, GJEPC has sought to make it the world’s one-stop shop for luxury
goods.
A Market Overview in Brief
The global gems and jewellery sector saw periods of slow growth at the height of
the pandemic. Despite this, the worldwide market size for this lucrative
industry is projected to exceed US$480 billion by 2025.
Indian Gems and Jewellery in Numbers
India provides 29% of all jewellery sold around the world. The country has more
than 300,000 companies selling gems and jewellery, which is predicted to grow.
Today, the Indian gem and jewellery sector has a large number of:
* Craftsmen
* Traders
* Artisans
This rapid development in demand has resulted in a skilled labour shortage.
Government Support
Because gem and jewellery export from India to the USA and other countries is
essential to India’s industrial production, the Indian government is dedicated
to promoting the products to ever-more countries—for example, supporting
jewellery export from India to Canada.
This includes:
* Taking steps to increase investment
* Building the skills the industry needs
These actions aim to guarantee this vital sector survives into the future.
Export growth is primarily attributable to increased import demand from the
sector’s top export market: the United States. North America, the Middle East,
and the Far East are the other primary export destinations for Indian gems and
jewellery.
Various government programs in India are supporting industrial expansion and
exports. This includes the creation of a special low-tax zone in Mumbai focused
mainly on the gem sector that aims to compete with the world’s leading diamond
trading hubs.
Benefits of Invoice Financing for the Indian Gem and Jewellery Industry
Indian exporters who sell to the US and EU can take advantage of invoice
financing or factoring. For example, this is one way to help the gems and
jewellery export to the USA from India.
This can help them in several ways:
* Working capital can help your business grow
* Receiving cash early cuts down on the number of days you have to wait to get
paid
* Up to 90% of the amount payable is delivered immediately after the products
are sent
* You can better cover your operating costs
* You can obtain money for future production faster, helping you sell more
* Keeps your business safe from debt risk
The significant advantage of receivables financing is the release of frozen
cash. This helps gem and jewellery exporters better employ their capital to
produce more profits.
Keep Your Gems and Jewellery Supply Chain Safe
Exports are up in 2022 mainly because import demand has picked up in the USA and
EU, two of India’s biggest export markets. As a result, many Indian traders have
been ready and waiting to fill orders fast.
This operation is both internal and external. It is internal because domestic
players are starting to work together, and it is external because large global
gems and jewellery trading companies are entering the worldwide market.
As an importer, you make purchases from suppliers in other countries. If you’re
thinking about improving the payment terms on your suppliers’ invoices, which
could lead to higher discounts on the goods you purchase) and ensure that your
supply chain is safe, you should consider invoice financing for your suppliers.
Want to know more on how it works? Contact us at Incomlend and we’ll be happy to
give you more details.
Read more
September 21, 2022
SHIPPING AND IMPORTING OVERSEAS: TOP 3 PROBLEMS AND HOW TO SOLVE THEM
Shipping and receiving products across the world can be a headache.
Global importing and exporting can be incredibly rewarding for both retailers
and distributors, but there are several obstacles to overcome. Before your
products even leave your warehouse, you can get lost in a minefield of paperwork
that includes logistics, taxes, customs, and other challenges.
In this article, we’ll cover three of the top problems when it comes to shipping
and importing overseas — and how to fix them.
Keep reading to learn more.
1. Managing Logistics and Shipping Issues
A huge challenge for global importers is dealing with logistics shipping issues.
It can often feel like certain problems are completely out of control. This is
why it’s important to have a sturdy infrastructure set up so that shipping can
be managed from several locations around the globe.
Although they always existed, shipping problems were shoved into the spotlight
during the COVID-19 pandemic in 2020. This had a detrimental effect on trade
around the world. Many countries closed their borders, which stopped the
movement of goods between nations.
Not only did trade slow down, but existing orders and contracts were put on hold
with no end. This led to severe shortages around the world for months at a time.
When there are disruptions in the global supply chain, it can cause a chain
reaction of importing problems, including:
* * Delivery delays
* Missing paperwork
* Spotty communication
* Mishandled products
Solution:
On a global level, several things need to happen to prevent a supply chain
disruption in the future. For one, transportation logjams need to be cleared up.
These logjams are a result of many issues, like:
* * * * Holdups in ports
* Container box shortages
* Price increases in several areas
Dramatic rises in container freight rates have further complicated the
situation.
Another critical issue that has led to shipping problems is recent labor
shortages. This has also caused more delays, cost increases, and logistical
challenges.
Both the public and private sectors need to invest in upgraded digital
infrastructure that allows workers to work more efficiently. This can help them
work remotely, perform tasks easier, and deal with pandemics and demographic
shifts.
On a micro level, businesses can take advantage of different trade finance tools
like supply chain financing. This allows importers to buy goods from overseas
suppliers on credit and invoices that can be paid up to 120 days later, making
the process faster and smoother for both parties.
2. Poor Communication
Communication is essential for all businesses, but dealing with other firms from
around the world can be complicated — making it vital to the success of
international shippers and importers.
Without it, it can lead to losses in profits and disgruntled customers.
Communication issues can stem from various issues, including:
* * * * Not being on the same page as international partners
* Secure communication issues
* Lack of transparency
* Different time zones
* Different communication tools
* Language barriers
To successfully move products around the world at a profit, these issues need to
be taken seriously.
Solution:
The first step to having strong communication is to make sure that your business
is fully aligned with all of your international partners. If even a single link
in the chain isn’t on the same page, it can lead to products arriving late to
the market.
Make sure to regularly communicate with everyone from procurement to suppliers
to other logistical partners.
When it comes to transmitting sensitive information, make sure that your
in-house and international software has high data security. This means it should
have a 256-bit TLS data encryption. Other important security tools include:
* * * * Frequent security audits
* Updated firewalls
* Up-to-date certificates
Lastly, allowing your communication to be as transparent as possible will
streamline your business’s communication. Allow your frontline employees to have
access to data so that no bottlenecks are created.
This will eventually have a positive effect on your entire supply chain, leading
to higher profits.
3. Delayed Payments By Buyers
Another export issue comes from buyers that don’t respect invoice maturity terms
and delay payments. As the supply chain crisis continues to grow after the
pandemic, many suppliers are being forced into longer payment terms from buyers.
This happens because both sides of the transaction are desperate to protect
their money. The pandemic had a huge effect on cash flow all around the world.
Buyers start to use delayed payments as a strategy to get more leverage on
suppliers. Although some places in the world are adding new regulatory
requirements to combat this, it’s a problem that’s happening all over the world.
In the worst-case scenarios, some won’t pay suppliers at all. This could be a
result of defective goods or any other part of the order not meeting the
requirements of the buyer.
Solution:
A great solution to this problem is the use of invoice factoring. With invoice
factoring, sellers can ship their goods and issue an invoice through a third
party.
This allows the exporter to receive funds that the buyer owes ahead of schedule.
They can get up to 90% of the invoice, even before it has been paid. The
receiver, on the other hand, has up to 120 days to pay the full invoice.
By using a trusted third party to facilitate the trade, both sides are
protected. Exporters can grow their businesses quickly by freeing up working
capital and receiving money that they are owed quickly. In this way, money can
be re-invested to pay the suppliers, employees, to finance the next production
cycle or something else.
Get in Front of Any Problems Shipping and Importing Overseas
Those are among the top problems when it comes to shipping and importing
overseas. By creating a strong foundation for your business and preparing ahead,
you can get in front of these issues before they hurt you down the line.
If you deal with international shipping and are ready to take advantage of trade
finance tools that can free up your working capital and ensure continuity in
your supply chain, make sure to reach out to us today!
Read more
September 9, 2022
LEADING FACTORS INFLUENCING GROWTH OF TRADE FINANCE
In 2020, the global trade financing market was valued at $44,098 millions but by
2030, it’s projected to hit $90,212!
International Trade financing continues to grow at an alarming pace worldwide
but most people don’t really know what it is. The truth is that trade finance is
the lifeblood of almost all business transactions that cross borders. It’s
important to know about because it creates opportunities for everyone around the
world to distribute their products.
In this article, we’ll tell you everything you need to know about trade finance
and the main factors causing it to grow so quickly. Keep reading to learn more.
What Is Trade Finance and How Does It Work?
Trade finance refers to the different financial tools used by companies around
the world to help trade and commerce. It helps create a smoother trading process
for both importers and exporters in different trade industries.
The main function of trade finance is to bring in a third party for trade
transactions. By doing this, they can remove risk from either of the two main
parties to facilitate the transaction easier in the short term.
For example, they can provide an exporter with payment with in-transit finance.
At the same time, it allows the importer to get an extended line of credit to
fill the order.
Different parties that can be involved in trade finance include:
* Banks
* Insurers
* Business to business importers with goods receivables
* Business to business exporters with goods shipping
* Trade finance companies
* Export credit agencies
Although it may seem similar to conventional financing, trade finance has some
key differences. It can protect against international trade’s unique risks,
like:
* Currency fluctuations
* Political instability
* Non-payment issues
* The creditworthiness of any of the parties involved
By using tools like lines of credit and insurance, the risk is lowered for all
parties and gets products moving around the world. It can also improve cash flow
for companies and improve the efficiency of their operations. By giving small
businesses working capital, everyone involved benefits.
What Is an Example of Trade Finance at Work?
Let’s imagine a Thai entrepreneur. He wants to export his hand-crafted textiles
to other neighbouring countries.
Depending on his time in business, he would need financing and working capital
solutions to get his business off the ground.
However, local banks are most likely unable to provide financing for different
reasons. His credit scores might cause some roadblocks as well. And if they can,
it’s probably at a really high cost. The application process might take too
long, too.
Another barrier he would run into is outdated regulation, which might block him
from doing useful actions. An example of this would be getting cash in advance
of delivering the product.
The most glaring issue is that big corporations can afford to do most of these
things easily but smaller businesses cannot.
With trade finance, all of the issues that lie between importers and exporters
can be bridged. This can lower the amount of time it takes for products and
payments to reach the parties, even in complex situations.
Trade finance can be used to help small businesses with cash flow management
without disrupting their supply chain. They can sidestep obstacles that might
have hindered them from trading internationally before.
By facilitating timely payments, trust is built between the parties. This allows
global trade relationships to grow.
Leading Growth Factors of Trade Finance
Trade finance is experiencing a huge period of growth and is showing no signs of
slowing down. Let’s take a look at some of the leading factors in its growth.
Rapid Change in Technology
Over the past few years, the world has seen exponentially fast improvements in
technology. This has led to better communication, mobility, and global
connectivity.
Every improvement in tech has led to cascading effects, allowing companies to
come up with more innovative products and better process technology. This has
made the world “smaller” and more available to work together, which has allowed
companies to move abroad with ease.
Increase in Competition
As competition continues to grow naturally across the world, companies prefer to
seek out intermediate goods and raw materials from countries that offer the
lowest costs.
Small business owners continue to set up units in different countries, which
lowers financial risk and the cost of operation. This increasingly popular idea
allows internationalisation to happen at a faster pace.
Trade Liberalisation
An important driver of trade finance is the continued liberalisation of barriers
to trade in both goods and services between countries. As governments continue
to allow wider market access to other countries, other governments typically
reciprocate the decision by allowing wider market access to both countries.
COVID-19 Pandemic
The coronavirus pandemic triggered huge changes in global trade. Although it
initially created huge disruptions in supply chains and manufacturing output,
this led to a higher need for trade credit to recover from the crisis.
Huge financial gaps appeared all over the world from the pandemic, which
hampered global recovery and affected small businesses dramatically. This caused
a skyrocketing need for trade finance to help support international transactions
to return the global economy to its previous levels.
Globally Connecting the World Through Financing
That’s everything you need to know about trade finance and the factors pushing
its growth. With trade financing, small businesses to large corporations can
move their wares internationally with smooth transactions.
If your business needs solutions for invoice financing, don’t hesitate to reach
out to us today!
Read more
June 7, 2022
HOW DO WE IDENTIFY CORPORATE MISCONDUCT?
In its latest Enforcement Report, The Monetary Authority of Singapore (MAS)
shows that a robust system of checks and balances is crucial for corporate
governance in companies. The report shows instances in the corporate world where
a poorly managed situation turned worse and eventually led to the collapse of
companies. One example is a global payments processor. The CEO and two senior
managers were accused of financial fraud, with about S$2.8 billion missing cash
in their accounts years ago.
Author’s Bio:
Selvaraj Nadarajah is the Group Compliance Manager and Money-Laundering Risk
Officer (MLRO) for Incomlend Group.
In Singapore, MAS is investigating some companies for potential breaches of
financial industry laws and regulations, ranging from suspected
disclosure-related issues and non-compliance with accounting standards.
What are the issues surrounding financial mismanagement at companies, what
constitutes fraud, and the impact on stakeholders?
Who tends to commit corporate fraud?
Corporate fraud refers to deceptive or illegal activities that an individual or
a company commits, including breach of directors’ duties, petty theft,
misappropriation of funds or falsifying financial statements.
Anyone can commit fraud at any time. It can be a CEO, a third-party vendor, a
customer or partner, or even a junior employee in the company. Everyone in the
company, from the board of directors, founder, CEO and significant shareholders,
play a crucial role in setting the corporate culture. If a senior employee has
been negligent in their duties, it creates opportunities for errant behaviour to
take root. It’s essential to have independent directors on the board who will
provide oversight of management practices.
In Singapore, an individual or a company who commits serious fraud could be
fined or even jailed. Some companies have also closed down due to severe fraud.
One example is the 1Malaysia Development Berhad (1MDB) scandal. Some banks had
their licences revoked in Singapore for their involvement in the alleged looting
of billions of dollars from Malaysia’s sovereign wealth fund came under
investigation in 2015.
Signs that a company may run into governance problems
An example of corporate failure due to bad governance practices is a local
social media company investigated in 2018 for possible breaches of the
Securities and Futures Act. The police investigation has not yet concluded.
Early signs of distress or tension can be detected when critical management team
members resign for personal reasons. The sudden departure of independent
directors, audit committee chairs or senior finance employees is a typical red
flag. Poor economic performance is another red flag, especially if the company
consistently performs poorly compared with its peers. It should trigger the
company management to ask if they are losing money to fraud.
Another common warning sign is when a company files a late reporting of
financial results, when material information is announced late or when lapses
occur.
Whistle-blowers are another source of information about corporate wrongdoing.
Costs of corporate misconduct
There is a cost to corporate misconduct. It comes in both monetary and
non-monetary costs. And often, at a high price. Especially when the organisation
loses its reputation, which could affect its business prospects in the future.
Or the company could even shut down.
Serious fraud could have a widespread impact beyond the company, such as an oil
trade company collapse in 2020 after a crash in oil prices exposed years of
hidden losses and alleged fraud by its founder. It was revealed that the company
had hidden years of losses. The oil trader was wound up after it failed to
restructure US$4 billion worth of debts. The bank loans amounted to a total of
US$2.77 billion to the collapsed oil trader.
For more information, contact our Incomlend team at info@incomlend.com.
Read more
February 18, 2022
KEEPING SAFEFLEX BUSINESS MOMENTUM GOING WITH INCOMLEND INVOICE FINANCING
PROGRAMME
As economies reopen worldwide, we can expect an increase in global business
trade activities in the days ahead.
Author’s Bio:
Jitesh Agrawal, CEO and President, SafeFlex International Limited
Jitesh Agrawal is a textile engineer from one of the world’s premier institutes.
He has been in the polymer processing field since 1984 and has concentrated on
poly-woven and poly-knitted products. He is the driving force behind
developments and manufacturing facilities with an in-depth knowledge of product
usage and needs.
According to a study by Market Research Future, the global bulk bags market is
projected to grow at a 6.80% CAGR to hit a valuation of around US$5 billion by
2023. India is one of the world’s most enormous Flexible Intermediate Bulk
Containers (FIBC) and bulk bags suppliers. The growing appetite for these
products and the revitalisation of global trade present an opportunity for SMEs
like us to capture new revenue streams.
SafeFlex International Limited is a leading India-based manufacturer of Flexible
Intermediate Bulk Containers, poly-wovens and poly-knits, with four
manufacturing plants. We have a portfolio of over 500 global buyers comprising
long-time clients who are distributors and manufacturers spreading over the US,
UK, and Europe.
SafeFlex has experienced significant revenue growth throughout the years, and we
want to keep our business momentum going. To keep up with the competition and
meet rising demands from our buyers, we are expanding our production capacity.
However, it can typically take us up to 90 days to cash in an invoice. It can
hinder our financial agility, manufacturing capacity, and expansion ability.
With our new partnership with Incomlend, we no longer face extended credit terms
as we can now cash in an invoice as early as three days after our bulk bags and
FIBCs are shipped to buyers. With the Incomlend Invoice Financing Programme,
we’ll now have the working capital and means to double our manufacturing output.
It allows us to take advantage of the thriving market and grow our revenue.
SafeFlex is excited to form this long-term partnership with Incomlend. Its
Invoice Financing Programme provides us with a quick turnaround solution that
will place our company in a stronger position for growth as economies start to
recover and the demand for our products continues to surge.
If you are interested in finding out more about Incomlend Invoice Financing
Program, contact info@incomlend.com.
Read more
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