This post originally appeared on Trade Financing Matters.
Many banks are trying to figure out how to provide supply chain finance capabilities to their clients and what technologies they need to support their infrastructure. Trade is now becoming just another specialized lending product at banks, and leading banks are trying to figure out:
- How to integrate trade finance with their factoring, commercial finance, asset based lending, invoice discounting and other bank lending areas. Historically, trade finance sat isolated all these years, mainly due to some specialized documentation around letters of credit and standbys, and received beneficiary capital allocations due to the off balance sheet (ie, non-funded) nature of the transactions.
- How to take advantage of the key growth area – trade credit sitting on the balance sheet of corporates. Solutions of enable early payment of suppliers are mushrooming, and eventually as networks and intelligent underwriting models are built – PO finance, inventory finance as well.
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