Issue 27 . Aug 2024
This whitepaper explores the symbiotic relationship between factoring and credit insurance in international trade finance. Factoring involves purchasing invoices from exporters and collecting payments from importers, while credit insurance protects against non-payment risks. Together, these tools enhance liquidity, mitigate risks, and enable businesses to expand into new markets. The whitepaper also outlines challenges in the current market, including poor information flow, cumbersome onboarding processes, and high premiums in some regions. It then explores how technological advancements like automation, digitisation, and centralised data repositories can address these issues and improve efficiency. A case study of Germany, where 95% of factoring is covered by insurance, provides insights into successful integration strategies. The whitepaper also discusses the impact of regulatory changes, such as Basel III and IV, on the industry and their implications for emerging markets. Finally, it proposes some next steps for building a resilient financial ecosystem, emphasising collaboration among stakeholders, education about the benefits of these financial tools, and continued innovation to adapt to evolving market conditions and technological advancements.
30 Aug 2024
Published by