Avoiding credit-risk related collapses : TradeFlow reduces risk in SME trade finance using innovative FinTech, non-lending, non-credit system
SINGAPORE, March 15, 2021 /PRNewswire/ -- When large credit lending firms collapse, huge shockwaves are sent throughout industry; the risk of contagion looms, threatening thousands of jobs, disrupting supply chains for essential goods, and increasing the barriers to credit that hits SMEs most.
Recognising these challenges, TradeFlow uses a system to enable trade that removes the issue of credit insurance whilst enabling SMEs trade profitably. FinTech-powered, it is non-lending, non-credit based and reduces fraud risk with more control over the logistics and testing of commodities transacted as a neutral principal; IOT tracking devices and the use of drones are used to minimise the risks of unauthorised cargo container swapping and unauthorised commodities access.
Such financial issues happening reveal the vulnerabilities of trade finance models that have not kept pace with rapidly evolving economic challenges exacerbated by the COVID-19 pandemic. SMEs, by their nature, do not have deep reserves or pools of collateral that they can pledge against the loans they have traditionally sought to give them the liquidity they need. In the aftermath of financial shocks, it is those SMEs that suffer disproportionately as banks and other lenders carry out portfolio rebalancing exercises. The business model of firms that rely heavily on credit risk insurance against defaults is one that is particularly vulnerable.
Termed the "Digital Transaction and Risk Transformation Engine (DTRTE)", TradeFlow's system enables global physical commodity trade for SMEs, with the DTRTE architecture providing the added advantage of superior risk-adjusted returns and capital preservation for investors. The system is also highly complementary to traditional trade finance lending institutions like Banks; TradeFlow does not lend money.
Tom James, CEO of TradeFlow affirms, "TradeFlow strives to innovate and bring digitised solutions to the international trading community that adds value in operational and capital efficiency, transforming risk to enable trade ." John Collis, CRO of TradeFlow adds, "TradeFlow's mission is to enable SME trade worldwide. When a financial earthquake hits there may be many casualties, but those numbers are dwarfed by the follow-on losses caused by the problems of getting adequate and timely relief and aid to the needy. Financial earthquakes remind us of the value of the system we have created. "
Nations around the world struggle with socio-political challenges, many made worse by the COVID-19 pandemic. Greater economic hardships brought about by higher-risk systems of trade can be prevented through innovations made possible by Digitalisation.
The world's growing trade finance gap needs to be filled, stably and sustainably , and TradeFlow's trade solutions can help achieve that to support the everyday flow of goods and money getting to the right places at the right times.
About TradeFlow
TradeFlow Capital Management (TradeFlow) is the world's first FinTech-powered commodities trade enabler focused on SMEs. TradeFlow consists of a diverse team of experts with the focused mission of addressing the increasing trade finance gap faced by global SMEs operating as producers/traders/end-users in the bulk commodity trading space. By performing an enabling role in international trade and globalization, TradeFlow creates growth opportunities for businesses and economies. To date, TradeFlow has successfully invested in more than US$500mn of physical commodity trade through 700+ transactions across 15+ countries and 25+ commodity types, with more than 800 SME counterpart entities KYC reviewed.
The TradeFlow Funds*, advised by TradeFlow, were conceived in 2016 and launched in 2018.
Headquartered in the Asian financial hub Singapore, TradeFlow is a FinTech Certified Company (SFA), a Corporate Member of the Singapore FinTech Association (SFA), and a Member of the Alternative Investment Management Association (AIMA).
* No.1 SME-focused trade finance fund in annual net returns to investors in 2020, as reported by Preqin Alternative Investment Database records
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