This is where solutions like supply chain financing come to the rescue, enabling companies to streamline their processes throughout the supply chain cycle. Let’s take a closer look at how supply chain financing can bring a host of benefits for both buyers and sellers when leveraged expertly.

What Is Supply Chain Financing?

SCF (Supply Chain Finance) is a term describing a set of solutions that are designed to optimise cash-flow, enabling businesses to focus on more revenue-generating or growth-accelerating strategies. It plays a key role in allowing them to shift focus from managing mundane processes and instead dedicating their time, expertise, and capital to investing in innovations.

One of the most impressive benefits of supply chain finance strategies is that they help reduce financing costs and improve efficiency for both buyers and sellers involved in the project. This is achieved by automating business transactions, as well as tracking key documentation like invoice approval, contract agreements, and settlement processes.

How Does It Work?

Supply chain finance is also known as reverse factoring. It is initially set up by the buyer who ensures the supplier is on board. The buyer receives the order from the supplier and approves the invoice. The banks or other financial institutions serve the role of a third-party responsible for providing short-term credit that optimises working capital and provides liquidity to both parties.

While suppliers gain quicker access to money they are to receive for the deliveries made, buyers get more time to pay off the hefty sums they owe to the suppliers. Banks or other lenders offering supply chain finance solutions evaluate the buyer’s credit history instead of the supplier’s.

This proves to be an advantage both for the buyers and the sellers. The sellers do not have to necessarily provide a detailed credit record to benefit from financing solutions. On the other hand, the buyers can negotiate better terms while drafting a final contract with the supplier such as extended payment schedules. This way, supply chain finance also encourages seamless and lasting collaboration between buyers and sellers.

With supply chain financing, both parties can use the capital on hand to accelerate business growth and engage in new opportunities that come their way. Here is a quick summary of the key benefits of reliable supply chain finance solutions:

1. Buyers Can Negotiate Better Terms:

The main benefit that buyers get is improved flexibility in terms of payment clauses in the contract drafted with suppliers. Here, the supplier receives the payment immediately. As such, the buyer can negotiate longer payment cycles or conditions without hurting their suppliers’ cash flow.

2. Buyers Can Ensure Streamlined Payment Processes:

Global buyers work with multiple suppliers coming from different markets. With supply chain financing, a buyer can skip the hassles of managing the payment terms and collections for all suppliers. Instead of paying each supplier individually, he only pays the reverse factoring provider.

3. Buyer-supplier Relationship Thrives:

Long-term buyer-supplier relations are critical to ensuring success for both parties. With supply chain finance, the relationship between buyer and seller remains steady as it introduces an external finance provider that acts as an intermediary to ensure a smooth payment process.

Get Excellent Supply Chain Finance Solutions with Tradewind

With over 20 years of unrivalled industry experience and highly-trained experts on board, Tradewind Finance can best finance your full supply chain. Being one of the leading supply chain financing providers, we use financing and risk mitigation techniques to optimise the management of working capital and liquidity in the supply chain. We provide receivables financing and funding to global suppliers based on their buyers’ creditworthiness and financial strength. We also support off-balance sheet inventory arrangements.

The post Supply Chain Financing: Need Of The Hour? appeared first on Tradewind Finance.

When it comes to seamless international trade, tools like Export finance prove to be a blessing. Export finance, also known as factoring finance or account receivable financing, is an excellent solution that exporters can use to conduct trade with international importers or buyers. It gives them easy and quick access to working capital without having to wait for their buyers to clear invoices.

How Does It Work?

Export finance is ideal for SMEs (small- and medium-sized enterprises) that need funds but have limited banking facilities or an undocumented credit history. Chasing late payments becomes the financier’s responsibility, to a great extent.

To attract importers, exporters often draft payment terms stating that buyers can have longer payment cycles. However, this also means that they have to manage a financial gap between shipping the goods and receiving payment for them. To arrange finances to keep the business going during this waiting period, exporters can turn to Export financing.

They can submit unpaid invoices to a finance provider that will grant them a percentage of the total invoice amount as an immediate payment. The buyer is then liable to pay the financier instead of the exporter. Once the invoice is cleared by the importer, the finance provider then pays the remainder of the money to the exporter, minus the service fee that is agreed upon by both parties at the time of contract signing.

Benefits Of Export Finance

Export financing brings a host of benefits to global suppliers. It helps companies maintain a steady cash flow, improve collections, and have preventive measures in place to handle debts. They can make the most of every opportunity that comes their way to generate more sales by offering longer payment terms to buyers without running low on capital. Here are the key benefits:

1. Exporters get quick access to finances that would otherwise be tied up for months on end.
2. They can use these funds to build growth strategies for the company, as well as invest in new tools and technologies to accelerate this growth.
3. The granting of finances is based on individual invoices and not the exporters’ credit history.
4. As soon as invoices are settled, the remainder of the payment is made to them by the financier.

Are You Eligible For Export Financing?

It is important to check the terms and conditions of the financier you are considering to know if you are eligible, as it can vary from provider to provider. To be eligible for Export financing with different lenders, exporters have to meet some criteria. Generally speaking, Export finance is available to exporters who trade globally, and have to grant longer invoice payment terms.

In some instances, exporters also have to provide proof of the minimum percentage of revenue coming from exports or submit unpaid invoices. To qualify for Export finance via conventional means such as banks, exporters may have to meet additional criteria, such as a positive credit score or proof that the company is making enough revenue to repay loans.

Leverage the Power of Export Factoring with Tradewind

Tradewind Finance specializes in cross-border transactions and finances trade globally for sales made on open accounts, letters of credit, and documentary collections payment terms. We solve short-term cash flow issues by purchasing your company’s accounts receivable in exchange for an advance of up to 95% of the total invoice value. We then collect the full amount from your client upon invoice maturity. Once the invoice is paid in full, we send you the remaining balance.

Why Choose Us?

With an emphasis on streamlining company cash flow, Tradewind offers non-recourse financing solutions, providing quick working capital for our clients. You also get the flexibility to choose the best avenue to make the most of Export finance:

1. Export Factoring on Open Account Terms:

We first inspect the creditworthiness of your buyer and set a credit limit on them. Then, we buy your accounts receivable and pay you generally within 24-48 hours of invoice submission. We handle the management of your accounts receivable and the complete dunning process. In case your customer cannot pay due to insolvency, we will pay you (non-recourse).

2. Export Factoring via Payment Against Documents:

If you sell on documentary terms, we will advance the funds and handle the bank collections process.

3. Export Factoring via Letter of Credit:

Your buyer opens a letter of credit with us, which guarantees you are paid if the terms and conditions specified in the letter of credit are fulfilled.

Here are some of the other key advantages of choosing us as your Export financing partner:

1. Our services are not like loans. As such, for most companies, our financing does not show up on your balance sheet as debt.
2. The application and set-up processes are faster and easier than when applying for a bank loan.
3. We primarily finance based on the quality of your customer’s credit, not based on your financials.
4. You have peace of mind as we monitor the creditworthiness of your customers and assume the risk of a shortfall of payment due to their insolvency.
5. You get paid within 24-48 hours of invoice submission instead of in weeks or months, or even faster in some cases.
6. You can offer longer payment terms, and therefore are more likely to attract larger buyers.
7. You have a streamlined workflow as we perform collections, dunning, and bookkeeping on your behalf.
8. Our local experts comply with the regulations of each country we operate in and offer appropriate services such as currency regulation control.
9. Our financing solutions can be tailored to your company’s needs, and can be scaled to keep up with its growth.

In addition to factoring your export accounts receivable, we can also finance your full supply chain. Our global supply chain finance programs can support facilities based on payables, receivables, and inventory. Using purchase order funding, inventory lending, letters of credit, and structured guarantees, our financing helps align the needs of both buyers and sellers.

The post Export Finance: Benefits, Eligibility & Application Process appeared first on Tradewind Finance.

In the export sector, taking your business beyond boundaries requires you to ensure that buyers put you on top of their priority lists when it comes to importing products. This is where international trade finance becomes significant. How so? It enables exporters and importers to conduct business across the globe, and seamlessly so. Let’s take a closer look at what international trade finance means, how it works, and what are the key types available.

What Is International Trade Finance?

International trade finance refers to the financial aid provided by banks or financial institutions to companies who aspire to expand their business on a global scale. It plays a key role in simplifying trade between importers and exporters who work collaboratively from different corners of the world.

A key benefit of trade finance is that it reduces the payment and supply risks between exporters and importers by introducing a third party such as banks or NBFCs. Exporters receive payments as per the contract, whereas importers can extend credit to complete the delivery of goods.

How Does It Work?

International trade finance involves adding a third party that covers financial activities like issuance of letters of credit, bank guarantees, lending, forfeiting, export credit, factoring, and such. These financial tools help exporters conduct international business transactions, reducing the hassles or risks that usually accompany them like currency fluctuations, political instability, issues of non-payment, or the creditworthiness of one of the parties involved.

What is the difference between conventional financial aid and trade finance? Exporters can manage solvency or liquidity with loans or credit issuance provided by banks as well. However, this lack of funds is documented. The key differentiator here is that trade financing does not necessarily indicate a buyer’s lack of funds or liquidity – it’s just a matter of getting payment to the exporter quicker.

Global trade finance is leveraged by both buyers and sellers to accelerate business growth as it facilitates the hassle-free delivery of goods and services internationally. It allows exporters to keep up with the changing buyer trends and patterns, outpacing their competitors by being ready for any and every opportunity that comes their way. The parties usually involved are importers, exporters, banks, trade financial institutions, and insurers. The importance of export finance in India is rising by the hour. Today, there are several trade finance instruments that companies can bank on.

Types of International Trade Finance

Trade finance is primarily categorized as import finance and export finance.

Import finance paves the way for hassle-free importing of goods and services from global suppliers for companies who wish to introduce new products, while also making the most of exchange rates and low production costs. It is generally secured against various documentation such as invoices, bills of exchange, promissory notes, bills of lading, letters of credit, and such.

Export finance involves providing financial aid for both the pre-shipment and post-shipment activities. Excellent export finance with expertise can provide financial support throughout the entire lifecycle, right from manufacturing to production to delivery of goods to the buyer. It ensures that all processes are executed as planned, even before the payments roll in from the importer.

The classification of global trade finance is more nuanced when we explore it through various financial instruments. Here are some of the main types of tools that are designed to facilitate international trade finance:

1. Letter of Credit:

A letter of credit is issued by a bank on the behalf of the buyers. It guarantees that the seller will receive payment in exchange for the goods and services delivered to the buyers. Under unwarranted circumstances, if the buyers are unable to make the payment, the bank or the financial institution will step up. It will pay the seller by the terms and conditions stated in the letter of credit.

2. Bank Guarantee:

As the name suggests, this guarantee is also issued by a bank. The bank serves the role of a third-party guarantor in case the importer or exporter fails to make the payments as per the contract.

3. Forfaiting:

Forfaiting is a post-export trade finance tool associated with receivables. In this case, the exporter sells all their accounts to a forfaiter at a discounted rate in an exchange for cash. The supplier does not have any recourse in forfaiting. Once the receivables are sold, the supplier cannot be held accountable in instances of non-payment from the buyer. As the forfaiter is exposed to additional risks, forfaiting can prove to involve more costs for the supplier as compared to factoring.

4. Factoring:

Goods are often exported internationally via contracts featuring payment terms that do not require the buyer to pay for the goods for multiple months. Waiting for 6+ months to receive payment is not an ideal situation for suppliers who must clear bills monthly. This is where factoring companies in India come to the rescue. They represent another type of post-export finance. Here, a financial institution buys the receivables of the supplier for a discount. Once the invoice is ready, the buyer must pay the factor instead of the supplier.

5. Payment in Advance:

This is a type of pre-export trade finance wherein the supplier receives an advance payment amount or the full payment from the buyer before the delivery of the goods. This gives more leeway to suppliers in terms of maintaining a consistent cash flow. However, it can be risky for the buyers in case of delayed or failed delivery.

Go Global with Tradewind

Expand your export business beyond boundaries with Tradewind Finance, one of the leading international trade finance companies. Our experts are trained to guide you through the best solutions, each one tailored to your requirements. Trade finance companies like Tradewind offer trade finance facilities in multiple currencies, eliminating the risks resulting from currency exchange. We have over 180 employees working from 20 offices located in 12 countries, speaking over 15 languages. Our highly trained staff offers world-class customer service and truly understands global trade

Our services bring you the best of both worlds – Fintech and Banking, minus the complications. Representatives at Tradewind are multicultural and fluent in over 15 languages, serving clients in more than 30 countries. We provide flexible financing solutions to companies belonging to diverse sectors – Automobile, Apparel and Textile, Industrial and Mechanical, Food and Beverage including Seafood, Electronics, Gaming & Media, and more.

The post International Trade Finance: Types Available For The Indian Market appeared first on Tradewind Finance.

Dubai, UAE — The UAE has announced several landmark decisions since the beginning of 2022, and the most important is the first-ever corporate tax and changes in the immigration rules by introducing a new visa system.

The introduction of new laws regarding the ownership structure of mainland companies will boost the economy, as it will attract more business investors that wouldn’t need the previous law allowing foreign business people to only have a 49 percent ownership.

The new law allows a foreign investor 100 percent ownership. As seen before, the moves by the UAE will spill over to the remaining GCC countries, boosting their economies.

On January 31, 2022, the UAE Finance Ministry announced the introduction of corporate tax, which represents a significant shift for a country that’s long attracted businesses from around the world thanks to its status as a tax-free commerce hub.

Speaking to TRENDS, industry experts said that tax reforms and changes in immigration rules would attract more people and foreign investment that would further boost the UAE economy in the coming years.

Corporate Tax impact

On June 1, 2023, the UAE is expected to become the fifth country within the Gulf Cooperation Council (GCC) to have a corporate tax regime. The new corporate tax would bring an additional $13 billion in revenue to the government purse.

With the introduction of corporate tax, the UAE has opted to align itself with the global economy and move away from the status of a zero-tax country. Such integration is critical given the ever-increasing global footprints of the UAE businesses.

It is to be noted that the UAE corporate tax rate of 9 percent for taxable income exceeding AED375,000/- ($102,000) on the UAE mainland entities would be the lowest among GCC countries and one of the lowest when compared with other low tax jurisdictions across the globe.

Nimish Goel, Partner at WTS Dhruva Consultants, said, “The UAE should continue to remain an attractive destination within the GCC for doing business even post-introduction of corporate tax. The lower tax rate should help UAE continue attracting large-scale investment from businesses and corporate behemoths across the globe.”

Goel said, “Also, the free zones would be exempt from corporate tax. Thus, the start-up ecosystem largely based out of such free zones and one of the main drivers of growth should remain largely unaffected by the introduction of corporate tax.”

He added: “The corporate tax will also help UAE in diversifying its oil-driven economy. The additional revenue generated could be utilized to create better infrastructure and a more business conducive environment. This should further increase the competitiveness of UAE as a global destination for attracting large-scale investments vis-a-vis other countries in the region.”

Peter Maerevoet, Global CFO and the Regional CEO for Asia, Tradewind Finance, said: The move would further add momentum to the UAE Economy – the major economic engine of the Middle East and North Africa (MENA) region, allowing gradually its dependence on the traditional revenue earned from fossil fuel.”

Rob MacTighearnain, CFO at Bayzat, said, “I see this as a positive step for the UAE and other GCC governments that follow suit with the implementation of corporate income tax laws. The country’s leadership has demonstrated a clear intention to cement the UAE’s position as a global hub for business and innovation. The introduction of corporate income tax strongly aligns with this vision by affirming the country’s credibility in the eyes of the global business community.”

Arun Leslie John, Chief Market Analyst at Century Financial, talked about the new VAT amendments and said these were made in accordance with the GCC Unified VAT Agreement, an effort to adopt best practices and standardize the tax framework. “A streamlined approach enhances the ease of doing business across the UAE and GCC economies through a shared understanding of the rules and provisions within the region, Arun said.

Omer Saleem, Director and Deputy CEO of Proven, said that the impact of corporate tax would be a more sustainable economic growth model whereby resources are invested in maintaining and enhancing long-term competitive factors from today’s economic value creation.

Vikas R Panchal, General Manager – MENA, Tally Solutions, said, “The new tax law will strengthen the UAE and GCC economy and attract well-meaning businesses and corporate giants from across the world. It will also make GCC and UAE a leading hub for business and investment in the world.”

Impact of Visa Changes

The UAE has changed its immigration rules by introducing a new Advanced Visa System from October 3, 2022, to allow longer tourist visits and a simpler application process.

The new Visa System is a significant restructuring of the country’s current immigration policy and aims to boost the number of residents. It comprises many residency types and the addition of new ones to cover all segments of investors, entrepreneurs, scientists, specialists, high-achieving students and graduates, humanitarian pioneers, frontline workers, and skilled labour in all fields, in addition to streamlining procedures.

The new visa system offers 60 days visit visa, a five-year multi-entry tourist visa, a job exploration visa, a five-year green visa, and a 10-year golden visa with more categories and benefits.

Arun Leslie John, Chief Market Analyst at Century Financial, said that the new visa system would positively impact the development of the economy by attracting more talent and investments from GCC countries and the wider international community. Additionally, these visa law changes coincide with the reforms in commercial law, compounding the benefits. The New Law addresses foreign investment and ownership, special purpose vehicles, and general corporate governance issues to improve the business environment for investors, John said.

He added: “The adoption of these progressive reforms enables UAE to fuel a solid business ecosystem and further its mission as one of the world’s leading destinations.”

Peter Maerevoet, Global CFO and the Regional CEO for Asia, Tradewind Finance, said, “With the introduction of longer-term visas for residents, it will boost the economy, as it will attract more new real estate investors and encourage current residents to invest in the competitive real estate market. It will give investors a more feel of security.”

Rob MacTighearnain, CFO at Bayzat, said, “Offering both longer term and non-employer connected visas to qualified professionals is a transformative change which will increase the country’s competitiveness in the global market for top talent and help to shape the UAE as a key economic player well into the future.”

Omer Saleem, Director and Deputy CEO of Proven, said, “The impact of changes in visa and business laws would lead to the region being able to attract foreign capital and talent and utilize these to realize the goals for sustained growth.”

Vikas R Panchal, General Manager – MENA, Tally Solutions, said, “Business and visa laws will strengthen, and the government is doing everything it can to make individuals and businesses feel they belong. In the UAE, the government has started issuing Golden Visas, which are signals for attracting long-term investment. In addition, the green visa, the 60-day tourist visa, job exploration visa, and more will result in simplified requirements and more benefits for visitors and residents.”

The post Reforms in tax and visa rules to drive UAE’s growth (Published in TRENDS) appeared first on Tradewind Finance.

In a highly competitive market, capital is key. Lack of capital means fewer opportunities for business growth as there is little to no funding to increase production, build inventory levels, or extend payment terms in a global supply chain. When it comes to financing for export businesses, there are several options. However, only a handful provide exporters with enough flexibility to manage cash flow seamlessly.

With conventional financing institutions like banks or loan sharks, there are certain limitations. The business may not be eligible for bank loans. In addition, the invoicing process can be a tedious one, especially if the right documents are not in place. This is where export businesses can bank on trade credit to escape the hassles of traditional financing.

With trade finance, exporters get paid right after they ship the goods and the buyer can pay later. Trade finance provides exporters with excellent flexibility in terms of controlling finance in the pre-shipment and shipment phases as well. Apart from offering exporters and manufacturers enhanced flexibility in terms of payments, it brings them multiple other rewarding benefits.

Solutions provided by trade finance companies facilitate a seamless experience for organizations looking to acquire capital to expand their business globally. The application process is often seamless and the approvals are quick. Let us take a closer look at the advantages of trade credit.

Trade Credit: How Does It Help?

When it comes to the export industry, most of the capital is heavily dedicated to the inventory that is currently in production as well as the invoices to be paid. Unlike traditional financing options, NBFCs now design their solutions in a way that addresses the key challenges of global exporters. Here is how trade finance is helping companies who aspire to conduct business across borders:

1. Export Financing:

Export finance provides businesses with working capital while they wait for the invoices to be cleared. Each economic year brings a new wave of changes and fluctuations that affect businesses belonging to the export industry. The retailers must alter the prices of the product to better suit the changing demands. During the slow periods in the year, the reduced prices of the products can significantly hamper their profits.

This is where trade finance comes to the rescue. With trade finance, exporters get easy access to post-shipment finance to offer extended payment terms to retailers. This way, they have a longer sales window to maintain profits.

2. Vendor Financing:

After the successful launch of any product, the next big challenge is to consistently meet the rising demand for the product. There are instances where the signs of inventory level depletions are quite evident. However, the current budget leaves no room to address the inventory predictions in the coming months.

In addition, most suppliers require payment before the shipment can move from location A to B. Trade finance companies can provide scalable export and import finance solutions, allowing businesses to optimize finances by providing quick and hassle-free solutions.

3. Export Factoring:

With quick factoring solutions at their disposal, export businesses no longer must wait lengthy periods for customers to pay them. Factoring companies have the potential to solve short-term cash flow issues by purchasing a company’s accounts receivable in exchange for an advance on most of the total invoice value.

The factoring firm then collects the full amount from the client or customer upon invoice maturity. Once the invoice is paid in full, the business in question then receives the remaining balance. Unlike bank financing, trade finance can provide off-balance sheet funding meaning that the funds will not be reflected as debt in the ledger.

4. Currency Protection:

Trade finance companies are adept at managing international currency costs and transactions, saving the business from the brunt of currency exchange rates that are privy to extreme fluctuations.

If your business involves trading in two or more currencies in a global market, then a reliable trade finance partner can help ensure currency protection. The right solutions can help eliminate the risks resulting from currency exchange.

5. Inventory Financing:

Managing inventory is of key importance to the success of a business, especially if it deals in goods that have a large and liquid market. With trade finance, firms get access to quick financing against their standing inventory.

Longer payment terms extended to retailers are critical for business growth. Reducing payment terms can result in retailers choosing to work with new suppliers. Inventory financing can help companies welcome a consistent flow of working capital. Businesses can then keep up with the increasing orders, thereby maintaining their growth trajectory – all while maintaining good relations with retailers.

Leveraging the power of trade finance can enable your business to climb the ladder of success at a speedy pace, and excel in a global world. Factoring companies in India help growing businesses manage the risk of not receiving payment for exports. With over 20 years of experience in trade finance, Tradewind is one of the leading invoice factoring companies in India.

Scale Your Exports Seamlessly with Tradewind Finance

Scale your export business with Tradewind – our experts will guide you through the best solutions tailored to your requirements. Trade finance companies like Tradewind offer trade finance facilities in multiple currencies, eliminating the risks resulting from currency exchange. Our global presence spans 14 countries across 4 continents.

Our services bring you the best of both worlds – Fintech and Banking, minus the complications. Representatives at Tradewind are multicultural and fluent in over 15 languages, serving clients in more than 30 countries. We provide flexible financing solutions to companies belonging to diverse sectors – Automobile, Apparel and Textile, Industrial and Mechanical, Food and Beverage including Seafood, Electronics, Gaming & Media, and more.

The post Alternative Financing: Enabling Businesses To Scale Exports appeared first on Tradewind Finance.

But unlike the indulgent spending pegged to the season, people may now be inclined to shut their wallets and settle, instead, for admiring the festive window displays. As we head into the homestretch of 2022, inflation remains at its highest pace since 1982, which has meant bumps in costs on everyday staples from baby diapers to gas. In one such instance of increased costs for essential items, prices for food rose 11.2 percent from September 2021, the U.S. Bureau of Labor Statistics reported.

Bigger investments have also felt the brunt of inflationary pressures. Costs related to shelter were up 6.6 percent in the past year, while price tags for new vehicles climbed 9.4 percent, according to the bureau. Amid the swell of inflation, individuals’ personal coffers, at one point filled with government stimulus checks and savings from the pandemic, have begun to empty out, putting a damper on shopping plans.

Discounts and promotions might be in order to lure in customers and sell off inventory this season. Brands and suppliers, who might also feel stretched for cash, can consider using trade finance to optimize their working capital.

Here are 3 ways that trade finance can benefit businesses this holiday season:

• Preserve cash flow. When using trade finance services, a lender will purchase receivables from a business and provide them with funding of up to 90% of the invoice value. This percentage might vary from lender to lender, but what does remain true is that rather than waiting months to be paid by their customers, a business is able to receive immediate capital and avoid a cash flow shortage. In the case a retailer signs up for trade finance, their payables – instead of their receivables – will be bought, the manufacturer will receive early funding, and stores can submit payment for their bills at a later date.If retailers are forced to mark down their inventory for the holidays – and manufacturers receive less orders from their customers – balancing cash flow through a trade finance arrangement can be crucial to operating smoothly in 2023.
• Maximize growth. By injecting liquidity into a business, trade finance also enables a retailer and their supplier to establish payment terms of up to 120 days in some cases. By enabling flexible payment terms, a manufacturer can increase sales. If sales are slow, which might be the case this season, a store can ensure their suppliers are paid while holding onto their cash for other expenses and strategic plans.
• Enjoy credit protection. Credit protection, which is often included in trade finance solutions, guarantees payment even if a customer defaults. Although we are past the worst of the economic fallout from the pandemic, forecasts indicate there might be a recession in our future. For this reason, it’s important for a business to insure their receivables and stay financially healthy, despite any headwinds 2023 might bring.

The post Why to Consider Trade Finance This Holiday Season and in 2023 appeared first on Tradewind Finance.

For businesses these days, keeping the lights on is challenging.

Though talk of inflation is largely centered on the strain on consumers’ wallets, companies are facing their own share of troubles from the climb in prices. They are being hit with heavy utility bills, a byproduct from the turbulent economic situation that has unsettled energy supplies globally. As paying for power gets harder, business owners are forced to scale down production because it has proven to be too costly otherwise.

Attracting enough workers to show up and get the job done has also come at a premium. In a tight labor market, employers are doling out higher wages with hopes of holding onto workers that were hard to find in the first place.

These factors, along with increased costs for raw materials, can leave a business wondering: How do we manage this rolodex of expenses?

Reduce Overhead Costs

If electricity is the problem, then conserving energy is a sound next step to confront the current energy crunch. While taking small measures in the near term, like turning off everyday office appliances when they’re not in use, can help support this goal, other long-term plans can curb the impact of the price swings associated with the commodities market. Companies may want to rethink production methods or shift to renewable energy sources like solar or hydro power for benefits that last, regardless of the economic climate.

Restructure Talent and Sourcing Strategies

Recent reports indicate that large companies like Ford Motor Co. and Bed Bath & Beyond are making cuts to their workforce. The move to restructure talent can offset the weight of wage increases, while putting a focus on efficiency. With consumer preferences changing, brands can better allocate money to divisions that are in line with innovation, rather than outdated strategies.

In addition to consolidating headcount, the time could be ripe for companies to evaluate their sourcing partners and establish channels that are most cost-effective. Big questions, like where to import materials from — if at all —, should be asked.

Tap Into Your Assets

All things considered, companies may still need extra financial support. The truth is, though, they don’t have to look much further than their own assets.

The age-old technique of trade finance still plays a significant role in managing cash flow today. The financing method releases capital from unpaid receivables, providing a business with liquidity right away.

To facilitate the funding, a business can contract a trade finance firm to purchase their receivables in exchange for cash upfront. Later on, retailers pay back the financial intermediary.

While businesses must meet several criteria to be eligible for a traditional bank loan, they can count on their own invoices for funding under this alternative arrangement.

Energy prices may not be coming down any time soon. But by making incremental changes and considering alternative sources of funding, businesses will be better positioned to build up capital reserves, pay their expenses – and keep those lights on.

The post Key Financial Strategies to Consider Amid High Inflation (Published in Emarat Al Youm) appeared first on Tradewind Finance.

by Joydeep Sengupta

Tradewind Finance, which set up its base in Dubai in May 2015, is concentrating on developing customised finance solutions for small and medium enterprises (SMEs) in the Middle East and North Africa (MENA) region.

The start-up holds a Category-2 licence from the Dubai Financial Services Authority (DFSA) that allows it to extend credit and provide advice on financial solutions.

Peter Maerevoet, who is based in Dubai, is the global chief financial officer (CFO) and the regional chief executive officer (CEO) for Asia at Tradewind Finance — an international factoring and supply chain finance company that has offices in 20 countries.

Earlier, Maerevoet had worked for Procter & Gamble in Belgium and the Netherlands where he held various finance functions and joined Tradewind Finance in 2016.

He weighed in on the finance industry’s outlook.

“The finance industry by and large is very competitive. There are a number of industry players offering similar services in each segment. While Tradewind Finance is up against regional and international market competition when it comes to delivering factoring services, we distinguish ourselves from other similar industry players by offering factoring services for both domestic and foreign enterprises, as opposed to other businesses that only offer this service for domestic operations. Our added advantages of cross-border finance, collections, and credit protection offer clients a complete package for their demands in international trade,” he said.

The start-up provides trade finance, which includes products like supply chain financing and export factoring. It also provides credit protection and services for collections that help firms to engage in international trade.

Tradewind Finance began operations in Germany in 2000, where it also has its headquarters.

Maerevoet explained how the start-up helps SMEs in the region. “Since banks provide 5 per cent of the credit to SMEs, Tradewind Finance, an alternative non-banking financing source, fills the lack of funding gap in the region. Usually, banks enforce strict requirements such as heavy collaterals and extremely time-consuming documents that prospects must meet to be eligible for a timely loan.

For SMEs, Tradewind relieves this pressure. It evaluates the buyer’s creditworthiness, which is advantageous for SMEs with insufficient financials and few assets. SMEs make up 95 per cent of all businesses in the UAE, according to recent research published by an agency of the Department of Economic Development, which is under the Dubai Government. As a result, SMEs employ 42 per cent of the workforce and are essential to Dubai’s economy.

However, a Peal Initiative survey revealed that 39 per cent of SMEs listed lack of finance as one of their top concerns. SMEs are frequently seen by banks as somewhat risky when it comes to lending because they cannot offer any useful collateral or a strong financial company history,” Maerevoet said.

He cited that Tradewind Finance presents a workable solution that will help resolve this issue without making a dent.

Trade finance is a set of financial instruments used to improve cash flow for sellers and buyers who do business internationally under various payment conditions.

One of the goals of trade finance is to ensure smooth trade for the sellers and buyers involved. Trade finance is not a loan – it is based on a company’s receivables and payables in many cases. This means that a company does not have to pay back the lender as in the case of a loan. Firms that offer trade finance serve as the intermediary between buyer and seller. In one trade finance scenario, the trade finance firm purchases a company’s receivables and advances them the majority of the invoice amount.

Maerevoet said, “We advance up to 95 per cent of the invoice amount. At a later date, we collect payment from the buyer and extend the remaining balance to the client.”

The UAE boasts one of the most diverse and thriving economies in the world, and during the past few years, it has risen to the top of several lists of global economies. SMEs are the backbone of many economies, including Dubai and the UAE. By employing a large percentage of people — around 42 per cent in Dubai — SMEs improve people’s financial conditions.

Tradewind Finance helps businesses focus on and invest in research and development (R&D), grow their operations, develop new goods, and other activities because of the improved cash flow.

The start-up offers timely guidance on navigating the world’s choppy financial waters. Tradewind’s cross-border financing packages and international capabilities equip businesses for entering new markets and make these ventures more secure through things like credit protection, overseas collections services, and on-the-ground support from our local teams around the world.

Flexibility is at the core of Tradewind’s services, according to Maerevoet. For instance, when deciding to fund a business, Tradewind looks at the creditworthiness of their buyers who may have stronger financials.

Tangible gains

Tradewind accelerates cash flow and maximises growth by offering flexible payment terms. By financing their accounts receivable with the added security that comes with international trade credit insurance, Tradewind also delivers significant credit protection to SMEs.

Non-banking trade finance trends

One of the most prevalent non-banking finance trends is lenders’ digitising their businesses. Today, there is a greater focus on transparency and traceability. Lenders are upgrading their software so customers can track the flow of their money in real time.

Companies can trade with confidence by having fast access to information on payment transfers. Companies are able to safely decide on purchases and orders by utilising the information that is easily accessible to them.

According to recent data, the Middle East received more than $1 (Dh3.67) billion in investments in 2020 alone, with 35 per cent of those start-ups having their headquarters in the UAE.

Data shows that it’s vital for SMEs to have a strong financial plan in place that enables them to concentrate on growth and development rather than worrying about money.

The post Star Tech: Tradewind Finance bridges funding gap for SMEs in the MENA region (Published in Khaleej Times) appeared first on Tradewind Finance.

SMEs (small and medium-sized enterprises) make up 90% of all businesses. Nonetheless, access to financing continues to be a challenge for them as traditional banks prefer to work with bigger corporations, which are deemed less risky.

By Peter Maerevoet August 4, 2022

When the idea to start a business begins to percolate, there is usually some sort of vision, fueled by a passion or sheer necessity for a product or service. After the “eureka” moment settles, something less novel enters the foreground to get a business up and running: money.

Most aspiring businesses face a major roadblock when it comes to financing their ideas, and it sometimes appears impossible to break the code that would get you accepted by major financial outlets, despite having innovative ideas and groundbreaking teams.

SMEs (small and medium-sized enterprises) make up 90% of all businesses. Nonetheless, access to financing continues to be a challenge for them as traditional banks prefer to work with bigger corporations, which are deemed less risky.

When opening a shop, a small business can explore alternative financing, where funding is based on the retailers’/clients’ creditworthiness. Today, more than ever, a business’s code of ethics matters too, so the stroke of genius that brought the company to life in the first place should also figure the well-being of society and the planet into it.

For a young outfit, the road to funding has been chartered by ambitious startups before it. Lenders, in fact, often assess applicants using a set of established benchmarks before they sign on to finance a company. Here’s a breakdown on the three major benchmarks that are a no-brainer for financial institutions to consider before financing any business:

1. Creditworthiness of the candidates Many lenders expect a candidate for funding to exhibit a history of creditworthiness. For example, if a business owner operated a different company in the past, then a financial institution will check whether bills to suppliers were paid on time, or whether the opposite was true, and vendors received late payments, earmarking the company as tardy with their bills. A lender is likely to favor a business that has demonstrated agreeable relationships with their supply chain partners, and can submit payments on a timely schedule.

2. Creditworthiness of the retailers/other buyers The vetting procedure will also investigate the credit standings of the retailers and other buyers the business has worked with previously, or has already signed contracts with for future sales. Conducting due diligence on the retailers’ financials is a core exercise for trade finance firms that serve exporters and importers small to medium in size. Instead of homing in on a small business’s credit history to justify funding, these lenders use the credit information collected on their buyers, such as Walmart and Target, to determine whether to proceed with financing for the selling entity.

Apart from tracing the credit history of both sellers and buyers, a financial services firm will also study the profitability of a new business. Though early data may be limited in detecting profit-turning trends, profitability remains an important piece of information for lenders as a key indicator for a healthy performance. Startups, for obvious reasons, lack a long operating history. Despite this, they can qualify for financing from some trade finance companies, as long as other performance indicators, like a strong portfolio of buyers with good credit marks, are met.

3. Inclusion of environmental, social, and governance (ESG) business measures Today, many financiers are also committed to partnering with businesses that have robust ESG measures in place. These can include sustainable production methods, pledges to reduce carbon footprints, protocols to ensure safe workplaces, and efforts to promote inclusion and diversity. Lenders can opt to incentivize businesses that put a focus on their ESG frameworks.

The post Three Key Benchmarks Financiers Consider Before Funding A Small Business (Entrepreneur Middle East) appeared first on Tradewind Finance.

India’s manufacturing industry is dominated by small and medium-sized companies. Frequently, these same businesses have to look outside of their local bank for a loan in order to replenish their working capital.

Often, banking institutions choose to work with larger enterprises, leaving smaller ones fresh out of luck. According to a 2020 study by the Asian Development Bank, 45% of total loan applications submitted by MSMEs were rejected around the world. Many business owners in India still rely on informal credit, such as loans from family and friends, or loan sharks, to establish and grow their businesses.

Meanwhile, trade finance companies cater largely to small and medium-sized businesses and their cash-flow needs. Export finance is offered by specialized lenders as a way of generating cash from receivables that would otherwise not be paid.

Business owners who apply for bank loans must fill out reams of paperwork and meet a stringent set of lending criteria. This is bad news for small and medium enterprises, as their balance sheets and credit histories tend to be weaker than those of large corporations, driving banks away.

The trade finance industry is characterized by a more flexible approach to financing. Sleek application processes are used to present interested prospects with a simple process that is based on the creditworthiness of clients’ buyers rather than their own financial standing. First-time borrowers who do not carry the expertise to compile and submit cumbersome loan documentation doubly benefit from this pared down process.

Furthermore, trade finance companies are uniquely positioned to fully comprehend the potential and viability of SMEs. Not only do they review documents more flexibly, but they also ensure that the basic minimum requirements for businesses are met, which makes it easier for them to secure financing. If these businesses were previously noncompliant, specialized trade finance lenders educate and nurture them until they become compliant, at which point financing is then provided.

Export finance is different from traditional loans because it does not have to be repaid. This is particularly important for smaller businesses with tight cash flows. In addition, collateral is not required to secure this type of financing. When they all come together, these factors reduce the burden of any added financial obligation on a business.

While earlier-generation companies were unable to handle international risks, export financing allows them to use their own receivables to grow, as well as protect against bad debts.

International trade financing firms like Tradewind Finance ensure that financial statements are maintained, certificates are obtained, and bookkeeping/ledger keeping is done with full records, creating a complete history and enabling businesses to obtain further funding, appeal to new buyers, and focus on core business growth.

As the government strives to reach a $5 trillion economy in five years, international trade finance firms like Tradewind are helping exporters reach their wider goals.

The post Export Finance in India: Benefits, Eligibility, and Application Process appeared first on Tradewind Finance.