The AFP Payments Guide series examines payments-related topics that are developed via interviews with treasury professionals. Presented as quarterly case studies with practical applications and tools to help you make informed decisions about key payment services.

AFP Payments Guide to What's New in Trade Finance

Underwritten by MUFG

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Can you benefit by moving away from paper processes to digitalization?  

This guide examines the state of trade finance, focusing on the two core trade products — letters of credit and documentary collections. It examines the innovations adopted and the hurdles that prevent wholesale digitalization of global trade finance that are yet to be overcome. 

Digitization of Trade finance is evolving and will result in reduced errors, fraud prevention, access to more detailed reporting, and supporting environmental, social, and governance (ESG) priorities as it becomes a bigger impact on organizations.

Read more to find out:  

1. Current State of Trade Finance
2. What is Changing in Trade Finance?
3. The Future of Trade – the Business Case for Digitalization

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CURRENT STATE OF TRADE FINANCE

Traditional trade finance techniques remain very labor intensive, with each transaction relying on the creation and subsequent exchange of a number of paper documents between multiple participants across different countries. The key processes in traditional trade are: 

  • Import/Export Letters of Credit: (also known as documentary credits or L/Cs) the primary trade finance instrument.
  • Documentary Collections: an alternative process to a letter of credit. 

    • Learn more by downloading the guide.

    WHAT IS CHANGING IN TRADE FINANCE

    At first sight, it might appear that nothing has changed in trade finance. Full digitalization of the core trade finance techniques still seems some way off. So, what is the state of the global trade finance market, and what hurdles still prevent digitalization? Learn more about: 

  • Traditional trade techniques still in use
  • Use of new technology  
  • Other Trends in Trade 

    • Download the guide for more information.

    THE FUTURE OF TRADE – THE BUSINESS CASE FOR DIGITALIZATION

    There are many potential benefits to shifting trade finance from a highly time-consuming manual process to a fully digitalized one. These benefits fall into three main categories: 

    1. General benefits that derive from any digitalization process.
    2. Reduces the incidence of fraud.
    3. Help participants achieve their ESG objectives and results from trade finance’s use of multiple physical documents and the need to send them around the world.

    DOWNLOAD the payments guide