Aztec Money simplifies trade financing …erases age‐old processes (Part 1)
Monday, February 17, 2014 - 13:57
Over the years, businesses involved in international trade have had to go through very tedious processes to complete seemingly simple international transactions. Companies that are into exports have particularly had to go through painstaking processes to close a transaction.
Trade finance is the method that importers and exporters of commodities and goods use to finance their businesses. International trade, the cross‐border exchange of goods and services, is now widely acknowledged as an important engine of growth in most developing and transition economies.
As Africa engages in trade, so an increasing number of banks and financiers are needed to lend money to finance goods and commodities trade -- right across the global supply chain.
The absence of an adequate trade finance infrastructure is, in effect, a barrier to trade. Limited access to financing, high costs, and lack of insurance or guarantees are likely to hinder the trade and export potential of an economy, and particularly the growth of small- and medium‐sized enterprises.
One of the most significant hurdles for traders undertaking transactions involves securing financing to enable the transaction to actually take place. The faster and easier the process of financing an international transaction, the greater the volume of trade that will be facilitated. Trade finance, therefore, provides companies with the necessary capital and liquidity, in addition to helping them to better-manage their cash flow and allowing them to expand and grow.
It is estimated that between 80‐90 percent of global trade depends on some sort of trade finance. However, poorly‐developed banking sectors or perceived country credit risk continue to act as blockages.
While the traditional processes of accessing trade finance may require that businesses dealing in export raise letters of credits, credit facilities or factoring, an innovation being championed by leading European trade financing company Aztec Money has erased all of these cumbersome processes.
The good thing about Aztec Money is that it circumvents virtually all the challenges of traditional modes of trade financing. Aztec Money predominantly connects non‐bank investors such as Asset Managers with suppliers. As companies sell invoices rather than borrowing against them, this removes the need for credit scoring, lending limits, contracts, or personal guarantees.
A recent study by the African Development Bank (ADB) indicates that the total value of trade finance requests received in 2011 -- by commercial banks responding to a survey -- amounted to approximately US$4.6trillion. Of this, more than US$1.6trillion was rejected, leading to the creation of an immense global trade finance deficit.
Aztec Money’s innovation is aimed at demystifying the processes of trade and export financing.
According to Kwabena Donkor, Aztec’s Business Development Vice president, the company provides an open‐access global marketplace offering Export Trade Finance that allows businesses to dictate the terms of their transactions.
The Aztec Money innovation, which has proven to be a success in at least 40 countries worldwide, was recently launched in Ghana. The company has its headquarters in Dublin, Ireland, and employs over 50 professionals to handle invoices from many businesses, mostly SMEs. Aztec Money has registered a number of suppliers to sell invoices on its platform since going live in June 2013.
By Richard Annerquaye Abbey | B&FT Online | Ghana
http://bft.ghanaweb.com/content/aztec-money-simplifies-trade-financing-%E2%80%A6erases-age%E2%80%90old-processes-part-1
