SCF and the trade finance gap
The trade finance gap, estimated by the ADB annually at US$2.5 trillion, refers to the fact that many suppliers are unable to access the trade finance that they need.
This holds back the ability of smaller companies to grow and compete, in turn impacting economic growth on a global basis.
Buyers (typically larger) would like to pay after delivery
Suppliers (typically smaller) really need to be paid when they ship

Cash against data - how SCF can solve the trade finance gap
Cash against data is the breakthrough.
Cash against data combines the outcomes of trade finance (cash at shipment) with the efficiency of SCF (simple, convenient, low-cost, scalable).
With the recognition and support of the ICC UK, it's time for "cash against data" to be adopted across the mainstream. Moreover, it is easy to retro-fit onto existing supply chain finance programs or to use standalone.
What's the breakthrough?
Suppliers really want trade finance because it delivers financing to them at shipment. But buyers find trade finance expensive, complex and time consuming.
Buyers offer supply chain finance, but this is usually only available after delivery.
What's needed is a new product that combines:
The cost, efficiency and scalability of SCF; and
The outcome of trade finance - cash at shipment.
That's "cash against data" - it gets suppliers paid at shipment but with the cost and efficiency of a supply chain finance program.
Does traditional SCF address the trade finance gap?
No. That's because supply chain finance is typically a post-delivery product.
Banks can only pay suppliers once buyers have approved the invoice.
Buyers find it difficult to approve invoices before delivery.
So that means that suppliers, even if they are eligible for a supply chain finance program, are still having to finance 20, 30, 40+ days after shipment.
SCF (without cash against data) does not help to address the trade finance gap.
How does cash against data solve the problem?
Cash against data does exactly what it says:
Suppliers provide data about what they have shipped
Buyers use this data to approve (or partially approve the invoice)
Banks can then pay the approved amount to suppliers
Data is available at shipment, it moves at the speed of light, and it's enough to enable buyers to approve the invoice and the payment - often with high levels of automation.
Automation means that all suppliers can be included and suppliers get paid as they ship - that's what you get with an SCF program that's powered by cash against data.
Is this difficult to set up?
No, it is easy. You can either add the capability to an existing SCF program or set up a new one. With PrimaTrade's approach, this can be done usually without an initial IT project, even going live in a week. That's because the invoice approvals are powered by data from the suppliers and there is no need for an interface to the ERP.
If you are thinking at all about your SCF program or setting up something new, we are happy to explain how new technology can help to upgrade your outcomes and get funding out to the smaller suppliers who really need it.
Why not find out more? Click here to connect.