Why Trade Finance Matters for Banking

Trade finance products in banking support companies in managing risks, enhancing liquidity, and facilitating smoother payment settlement processes in international transactions by securing payments and protecting both buyers and sellers. The World Trade Organisation (WTO) estimates that 80–90% of world trade relies on trade finance. Furthermore, in 2022, the trade finance gap reached a record USD 2.5 trillion, marking a 47% increase from USD 1.7 trillion in 2020¹.

Why Trade Finance Matters

There are several methods to achieve trade finance. For companies, these instruments offer benefits in various ways. For instance, a letter of credit (L/C) guarantees that the seller will receive payment, provided the conditions are met. Meanwhile, documentary collections (CAD) offer a less secure arrangement, where the bank acts as an intermediary but does not guarantee payment. On the other hand, receivables finance and factoring help businesses improve cash flow by selling invoices to third parties, enabling quicker access to funds.

For international trade, using these products allows businesses to expand into new markets with confidence, mitigate financial risks, and maintain steady operations without waiting for long payment cycles. With the global trade finance gap growing, these banking tools offer essential support to ensure that both large corporations and smaller enterprises can navigate international trade smoothly.

To tackle these challenges, I’d like to highlight Surecomp’s RIVO platform. RIVO is a collaborative trade finance platform designed to digitalize and streamline processes, improving efficiency and connectivity among corporates, financial institutions, and fintechs. The platform aims to accelerate trade finance processing, enhance accessibility for businesses of all sizes, and provide data-driven insights to support decision-making in trade finance operations.

If you’d like to learn more about how trade finance solutions like RIVO can support your business, feel free to get in touch!