How to Mitigate Supply Chain Risk with Trade Finance
One thing we know for sure and even during a period of unprecedented uncertainty, supply chains sure can take a punch. Since Q1 of 2020, supply chains around the world have been rolling with the punches proving just how resilient and agile they are capable of being. Today, the latest and greatest disruptions focus on order delays, port congestions, container shortages – to name a few.
The health of the supply chain depends on the relationship between the Buyer and Seller. Disruptive forces have put a serious strain on trading relationships. Some importers are facing strenuous delays because their supplier’s factory overseas has been shut down and their country is on lockdown. Reduced workforces have added more time to port and shipping delays. Plus, the steep surge in demand has resulted in supply scarcity coupled with skyrocketing shipping costs. According to data from Panjiva, the cost of shipping into the U.S. through April surged 207% over a year earlier.
Supply and demand has been extremely volatile since the onset of the global pandemic making it nearly impossible for supply chains to keep up and adapt on time with the shifting pace of change. Ask around and you will find industry chatter remains unclear on when this period of volatility will come to a resolve. So, the question becomes, how can companies mitigate supply chain disruptions while keeping current operations profitable?
Increasingly, businesses of all sizes have leaned into supply chain finance. Because trading relationships have taken such a toll during the prolonged state of challenges, supply chain finance is particularly valuable to ensure that suppliers are paid early and buyers can extend payment terms to improve their cash position amidst shipping delays. A supply chain finance solution provides supply chain stability and improves the management of working capital for both Sellers and Buyers.
Supply chain finance has helps businesses navigate the volatile trade landscape by easing liquidity challenges. To learn more about our unique supply chain finance solutions please contact us at info@traderiverusa.com.