the global investor
‘Denmark’s supply chain finance programme targets business bounce-back with $55bn working capital injection.’
Katie Fisher reports
T
radeshift, in collaboration with EKF, has developed a model that encourages banks to extend favourable credit lines to large organisations with export turnover in order to pay their suppliers earlier. EKF will underwrite these lines of credit. The Danish initiative is being touted as a cost-efficient alternative to government-backed loans and stimulus packages designed to help ease liquidity pressures placed on businesses as a result of COVID. It has also been endorsed by leading academics including Professor 16
of Economics at Aarhus University Philipp Schröder, The dramatic slowdown in trade over the past two months has seen many larger organisations extend payment terms to suppliers. According to a recent study by B2B Artificial Intelligence platform Sidetrade, late payments to UK suppliers have soared by 23% since 11th March. This clogging up of cash flow is putting significant pressure on otherwise healthy businesses, and risks slowing down dramatically any potential bounce-back after the current conditions lift. The problem has been made more severe by traditional trade finance
insurers threatening to pull out of the market, and government-issued ‘helicopter relief’ money struggles to flow to businesses that would most benefit. By effectively removing the risk and reducing cost elements around access to supply chain finance, it becomes a virtual ‘no-brainer’ for large organisations and their suppliers to use the system. By targeting the top 250 large buyers in Denmark, Tradeshift claims that up to $55bn in working capital can be made available to suppliers between in Denmark from June 2020, to June 2021.
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