Despite what you read about protectionism and trade wars, international trade is still a vital engine of growth worth around $20 trillion per year. In the digital age, it offers small and mid-size businesses a bigger opportunity than ever to expand and reach new customers and suppliers.
But a huge proportion of it, at least 80 percent according to the International Chamber of Commerce (ICC), depends on the ancient, sometimes arcane world of cross-border trade finance. An area of commercial banking that, until recently, has seen all parties involved in buying, selling, shipping and receiving goods trapped in a complex, time consuming and costly paper trail.
This is a major problem for small businesses that don’t have the time or access to the expertise required to navigate these tortuous processes. As such, it becomes a sizeable barrier to growth.
According to the ICC:
- Lack of trade finance funding led to a global trade shortfall of $1.5 trillion last year
- SMEs suffer the most. The smallest expect to be rejected for trade finance 50 percent of the time
- Of those, two-thirds have no alternative source of finance