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Most of the Asian market is dominated by large banks proposing traditional services. While their products have demonstrated a good track record, they are still extremely time consuming for the final users. The application process is paper-based, lengthy and bureaucratic. Recently Fintech is reshaping the market: technology allows for user friendly interfaces, flexible offerings, cheaper and overall more efficient solutions.
Last month, the Hong Kong FinTech Week 2018 breached its record of over 8,500 attendees from 57 countries. Trade Finance and in particular invoice discounting has become a hot topic and there some interesting and innovative solutions being presented.
Invoice discounting means a corporate can get an advance of payment on an invoice immediately and the balance at maturity, the corporate thus receives most of the payment without having to wait.
Invoice discounting therefore helps to manage cash flow, especially when the corporate needs working capital to increase productions, limit the FX volatility, face supplier payments or have timely opportunities to reinvest in their business.
The on-boarding is done on-line and with the help of technology it is extremely fast: in a matter of days a new corporate will be able to initiate.
Once the corporate is approved on the platform, it can upload invoices to the platform (plus purchase order and transport documents). Invoices are then purchased by investors who provide the necessary liquidity. An added benefit is the offering of trade finance insurance to cover for a non-payment by the debtor.
Why you should a corporate use invoice discounting and move away from traditional L/C?
L/C is a common and useful tool, but it does not offer a 100% protection. An overseas company has the option to cancel the payment in case of delay (LC simply expires), if goods specifications differ from what is stated on the certificate of inspection or if some documentation is missing.
“Don’t put all your eggs in one basket” is a sage adage and applicable to business. Seizing opportunities offered by Fintechs, is the best way to receive effective high-level services, and push the whole market into competition at your benefit!
Contact us to enjoy a new approach to solving financial issues!!!