3Rings Capital

Happy New Month! 🤗

It's that time of the year to reflect on Life's journey from January till date.

We hope you have been able to meet your goals and if not, November is a month of giving. Give yourself a chance to achieve your goals before the end of 2022.

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The trade finance option you choose is not a strategy in and of itself. To succeed, you must set your strategy and prioritize your goals for payment terms, supply chain health, and return on investment. Once you have a strategy, then find the right “working capital mix” of trade finance that supports your goals and the full spectrum of your supply chain.For example, supply chain finance doesn’t provide value for
you as a return. The value is in terms standardization or terms extension and support for your largest suppliers.

Best practices to consider as you develop your strategy:

• Prioritize the liquidity of suppliers.
• Use banks to build cash, while using the balance sheet as much as possible to boost margins.
• Consider a mix of trade finance solutions to fit needsacross the full spectrum of your supply chain.
• Limit your reliance on a bank or single entity for youroverall strategy.
• Speeding up payments, whether on the receivables orpayables side, always improves margins.
• Shareholders always value margins and EBITDA overworking capital.
• You must protect your business and your supply chainregardless of what is happening in the market.
• Suppliers often need a trade finance option but may beconcerned about protecting their revenue stream and notbe forthcoming about liquidity issues.

Trade finance offers a return on
low-risk investment and protection for supply chain. Not all trade finance options are equal. And not all are a fit foryour company’s unique needs. However, there are a few best
practices for trade finance that are universal.

Trade finance helps multinationals put cash to work in eachgeography rather than remain “trapped.” It also supports yoursupply chain and helps you respond to increasing fulfillmentpressures.

KEY TRENDS IN TRADE FINANCE:

• No-risk, you are receiving a discount on money you already guaranteed to pay your suppliers
• Global, puts cash trapped on a balance sheet to work in each geography
• Improved margins, adds value to an asset earning little in interest with little effort

ACCOUNT PAYABLE

Many organizations focus strategy on managing operating expenses. However, accounts payable offers the best opportunity for your bottom line. For Account Payable that value lies in both process improvements and leveraging trade finance.
Regarding savings and efficiencies, automating the AP process allows companies to reduce the bottleneck from reliance on paper documentation, and to shorten invoice
cycle times.

Account Payable automation requires not only investment, but significant process change for both you and your suppliers. A common misconception is that your AP process should be automated before you consider trade finance. This approach leaves value on the table.

UNLOCKING VALUE FROM ACCOUNT PAYABLE

• AP automation standardizes your process, reduces themanual effort required to process invoices, and providesgreater visibility of payables.
• Launched first, a trade finance solution that offers earlypayment for discounts, increases your margin, and helps fundAP process improvement.
• With both programs in place, there is an increased window ofopportunity for value from discounting.

Investment into digitisation has been happening for the past two decades, but “what we’re seeing now is the use of applications towards consumers and that’s where lower- and middle-income markets are seeing the growth of interest.
https://www.bii.co.uk/en/news-insight/insight/articles/accelerating-digital-transformation-for-sustainable-economic-development/?fl=true