Why should businesses digitize their trade transactions?

Why should importers and exporters be embracing seamless, frictionless, paperless trade and leveraging digital solutions to secure trade finance funding and growth?

We explore the challenges trading corporates currently face with cumbersome, manual trade finance management, and why automating their trade transaction process is critical to future-proofing their own financial health and that of the national and global economy.

The challenges for trading corporates

With 4 billion paper-based documents flowing through the system at any given time, the current process is inefficient, costly and complex.* With so many parties typically involved in a transaction, there is a sluggish, error-prone exchange of data, leading to inconsistency, security risk, delays and unnecessary cost.

The simple fact is – that with the average UK transaction taking 2-3 months – trade is taking too long. An over reliance on paper means that the ecosystem cannot efficiently connect and communicate, which is negatively impacting access to finance, trade volumes and the environment!

Post pandemic, geopolitical supply chain disruption has seen a consistent fall in global trade* which may only now be starting to recover. To facilitate this recovery and drive greater lending efficiency, particularly to the smaller and medium-sized enterprises (SME), now is the time that companies of every size should be turning to digital solutions and asking their banks to do the same.

What’s changed, why should businesses digitize their trade transactions now?

i) Legislation is supporting digitization. A Santander survey from 2023* stated that 35% of international companies cited bureaucracy as a barrier to trade, yet all of them are either ready or preparing to exchange digital trade documents. With the passage of the Electronic Trade Documents Act (ETDA) which came into force in September 2023, all companies using English law can now transact digitally.

ii) Digitization will promote growth. A 2021 ICC UK study* identified that the value of exchanging digital trade documents instead of paper would generate £25bn in SME trade growth and £1bn in additional working capital to fund UK trade. This is significant growth potential which cannot be underestimated and is surely echoed across many other markets.

iii) Digital trade is more efficient. The same ICC UK study revealed an estimated £224bn in efficiency savings, an 80% reduction in trade transaction costs and the time taken to secure cross-border compliance reduced from 25 days to just 1 day. Further exemplifying the efficiency of digital document exchange, Surecomp recently completed a series of electronic bills of lading (eBL) transactions over its RIVO™ platform in just 1 hour.

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Read also our Interview with Surecomp: From Paper to Digital in One Hour: How RIVO is Revolutionizing Trade Finance with Electronic Bills of Lading

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There are further reasons why digital trade is an undisputed standard practice for any corporate looking to future-proof its business and drive growth:

i) Access to better finance through lower interest rates and faster payment terms

ii) Reduced fraud and compliance risk with greater transparency, faster legal entity identification (LEI) and sanction screening

iii) Reduced insurance premiums, brokerage and demurage fees

iv) Improved sustainability with paper-less processing and ESG data reporting

In summary, digital transaction processing enables cheaper, faster, simpler and more sustainable cross-border trade. With significant efficiency gains and standardized communication across the ecosystem, companies are less exposed to delay and disruption. While improving liquidity, strengthening supply chain resilience and enhancing visibility and control, businesses can achieve cost savings, accuracy, compliance, customer satisfaction, scalability and growth.

And if you’re left convinced of the benefits but wondering how to get started…as one of Surecomp’s corporate clients, and Nike would say ‘just do it!’ Get in touch with Surecomp for help through the journey.