Digital Upstarts Set Sights on Impacting Trade Finance

Back in 2019 — a lifetime ago, before the pandemic uprooted everything — PYMNTS published a report titled “The Trade Credit Dilemma,” spotlighting the $3.1 trillion U.S. firms were owed on any given day.

Receivables are what’s owed, and what ideally should be spun by IOUs and invoices into real cash traveling up and down supply chain threads into suppliers’ coffers. The reality is a bit different, where there’s a ripple effect: The more delayed a payment is to one firm, the more likely that company will hold back on paying (or may be unable to pay) its own suppliers.

Late payment equal cash flow headwinds, and discounting can have a detrimental effect on cash flow, too. Credit is still expensive, as interest rates are still relatively lofty in the wake of central banks’ efforts to battle inflation.

The problem’s a global one, and in this recent survey by the Asian Development Bank, the estimate is that the global trade finance gap was $2.5 trillion as recently as 2022.

The past several weeks have underscored the ways in which the global stage has become a staging ground for partnerships, fundraising, and above all, the digitization of the processes — invoicing and documentation — and payments, including supply chain finance, that seek to help close those gaps.

Debopama Sen, head of payments, Citi Services, said in an interview at the beginning of this year with PYMNTS that supply chains are evolving and “dealing directly, and digitally … with a whole different set of counterparties,” and the evolution also includes embedded financing options.

As for the recent partnerships, as reported this week the Bank of New York Mellon (BNY) and Mizuho Bank are collaborating to provide trade services to corporate clients in Asia. The banks have formed an agreement for correspondent bank network bank connectivity for international trade, as announced over the weekend.

Separately over the summer, Citi and International Finance Corp. (IFC), a global development institution that is a member of the World Bank Group, have partnered on a $2 billion sustainable supply chain finance program focused on emerging markets.

This project is the largest to date under IFC’s Global Supply Chain Finance program, which was launched in 2022 to help address supply chain finance gaps for small and medium-sized businesses (SMBs) and to expand access to sustainable supply chain finance, the entities said.

Last month, Drip Capital secured $113 million in new funding to develop new products and to accelerate the growth of its digital platform for trade finance. Drip Capital collaborates with more than 9,000 sellers and buyers in more than 100 countries, helping SMBs manage their cash flows and working capital, the company said. In the past eight years, the company has financed over $6 billion in trade transactions. The company uses artificial intelligence (AI) to help assess credit risk.

The payments would not get done without the proper documentation. Last month, Lloyds Bank launched a collaboration with AI platform Cleareye.ai. The partnership, in the U.K., will use AI to streamline processing and compliance checking for trade finance documentation.

In addition, the AI-powered tech will carry out automated examinations of documents — in keeping with the International Chamber of Commerce Rules for Documentary Credits and Collections — along with  critical compliance checks, including trade-based money laundering checks, the companies said.

Elsewhere, Visa, in collaboration with PYMNTS Intelligence, found  across eight industries and 23 countries, as documented in the “2024-2025 Growth Corporates Working Capital Index,” that 7 in 10 users of financing report improved buyer-supplier dynamics.

As many as 68% “report being better able to meet customer demand and take advantage of opportunities because they accessed financing,” per the report. Roughly 15% of top performing firms used virtual credit cards, 41% used working capital loans.