There are constant changes going on in the financial world, as currency values go up and down, political action and other events all have an impact on global finances. For financial trade, there are many changes set to occur in the market within the next few years, that those who work in or run businesses involved in trade finance should be aware of.
From businesses exporting to clients and customers abroad, to firms negotiating with suppliers, future changes could affect the way such companies work. Here are three factors posed to change financial trade in the coming years.
Quicker payments required
There has been a huge rise in late payments over the past few years, with the issue spiralling out of control. For the construction industry alone, late payments rose by 27 per cent in 2015 and continued to grow in 2016, while for other sectors it was also a problem.
Late payments lead to cash flow issues which many businesses claim are the biggest factor preventing them from growing. Therefore, it is likely that more and more firms will be demanding quicker payments, providing invoices with shorter terms and even seeing some government action to tackle this financial problem.
Increase in use of trade finance
The use of invoice and trade finance has also grown, mostly in retaliation to late payments but also due to other issues such as currency volatility. For example, after Brexit the value of the pound dropped to record lows before beginning a resurgence, it is highly volatile.
It could take a few weeks for goods sent out by Chinese exporters to reach the UK, during which time the value of the pound may have increased. Therefore, many suppliers will want their payment as soon as possible to avoid losing out due to currency volatility. Trade finance from MarketInvoice helps businesses deliver the payment quickly and being able to grow before settling the payment later.
Emerging trade deals
Another knock-on effect of political events such as Brexit and the US election could see a number of new and adapted trade deals emerge. The UK will have to negotiate new trade deals with EU countries, which could take up to ten years. While with Donald Trump the President-elect, he has claimed renegotiating trade deals with certain countries will be one of his first priorities.
For businesses this could create a lot more financial issues regarding trade, leading to them having to take a new approach and adapt business plans. If you run a company involved in trade then be aware of such changes coming up to avoid running into trouble.
