Trade And Supply Chain

1. Automation Is The Key Trend In Global Trade Due to ever-increasing paperwork, time zone hurdles and communication difficulties, the international trade and supply chain has traditionally had delays and limits in the context of global trade. Regardless of how suitable the buyers and sellers are, manual processes along with lack of trust, visibility and transparency of trades frequently impede the purchase and sale of produced goods and raw materials around the world. However, that is slowly changing. Technology and services are now available to help speed up processes and eliminate impediments. In industries where global sourcing is common, automated systems that connect buyers, suppliers, and service providers have brought about many improvements. Manufacturing and sourcing have altered as a result of supply chain network automation. Collaboration, trust, efficiencies, and accuracy are all enhanced when processes and workflows are automated among participants. As a result, open account trade has become more popular in international trade. The traditional trade finance tool, a letter of credit, is a bank promise that a company will be able to pay its manufacturer or supplier for its goods when they are ready. To protect parties and cover risk in commercial negotiations, this was historically a required and time-consuming tool in international trade.

2. Open account transactions, a cheaper, more flexible and efficient alternative to the letter of credit are widely used now to extend the payment terms for buyers. This consequently imposes higher risk for exporters. However, buyer credit risk could be mitigated by using one or more appropriate trade finance techniques, fraud risk/disputes could be minimized by leveraging technology, and open account terms could be financed using various trade finance tools. Trade automation nowadays focuses on two areas. One is to automate physical transaction flows from procure to pay. For example, automating transaction documents and processes on a supply chain collaboration platform eliminates paper from thousands of purchase orders, invoices, amendments, ASNs, and other trade documents, thus increasing efficiency, data accuracy and authenticity, as well as end-to- end visibility. Besides, artificial intelligence and machine learning are increasingly used to auto match the trade documents to identify if there are any discrepancies. The other area for digital transformation is in trade finance automation. Straight through processing is enabled via H2H/API connection with Banks and other financial institutions, which makes financing requests seamless. Such invoice information submitted for drawdown is usually directly pulled from corporates’ ERP system without manual intervention, which provides more comfort when assessing credit and fraud risk. Besides, in recent years, Fintechs are adopting new technologies to facilitate open account finance. For example, blockchain solutions are embedded in deep-tier financing.

3. AI/ML based reconciliation, working capital forecasting and risk profiling are largely used to help improve the portfolio quality and efficiencies. With trade financing getting increasingly automated and transparent, traditionally hampered partners on both the supply and procurement side of the supply chain will benefit massively from a more trusted trading community and easily available finance. The potential to access finance based on real time market data, automation capabilities and new technology are sure to revolutionize the industry at large.