Trending Now

Building a Resilient Supply Chain with Advanced Predictive…

New Articles

Top 5 Payment Providers for Retail Businesses

payment
Archives, Banking, Commentary, Global Trade Daily

Top 5 Payment Providers for Retail Businesses

Leave a comment

Payment providers are critical in assisting organizations to thrive as technology, new payment choices, and markets continue to evolve. Making your website capable of making online purchases, on the other hand, is more difficult than you might think. Connecting your website to a payment processor frequently necessitates significant technical knowledge. Fortunately, third-party payment service solutions provide this functionality without complication to process transactions and improve the shopping experience for your customers.

There are various types of payment service providers in the market. They differ in terms of features, capabilities, and pricing. How can you know which one is right for you?

How to select a payment provider for your retail business

Choosing a payment gateway for your retail business can be more difficult than you think. When assessing payment providers for your website, you can consider a point of sale software connected with secure payment terminals or look for the following crucial features:

Fees: Different pricing schemes might have varying effects on your business. You should be careful of providers that charge for set-up, monthly fees, and variable volume levels. Transaction Processing: You should keep track of how long it takes you to receive paid following the transaction.

Integration: Before choosing a provider, you may ensure that the payment solution interfaces with your website or any of your other applications.

Customers: You should take into account your consumer base’s preferences. Using a supplier that your customers already use for their payments can ensure a faster and less complicated checkout for the vast majority of your customers. Do you have a large number of eBay customers? They are probably familiar with PayPal, for example.

PCI Compliance: You should ensure that your provider adheres to PCI DSS requirements to ensure safe transactions for both your customers and yourself.

Let’s take a look at some of the best payment providers accessible for your retail business!

Paypal

PayPal is often considered the “godfather” of all payment gateways. It becomes a dominant presence in the industry with over 375 million active registered accounts in over 200 countries.

During the checkout process, PayPal Express Checkout asks customers to leave your site and log in with their PayPal account or establish a new one. Your website will have a PayPal button.

Customers leave your site to check out and connect to their PayPal account, or they pay by credit card without needing to sign up for an account when using PayPal standard. PayPal Pro enables you to host and modify the whole checkout process, without requiring the customer to leave your site. It also takes credit cards over the phone, fax, and mail.

Stripe

Stripe is one of the most well-known eCommerce payment gateway services. It was founded in 2010 and today controls between 10% and 20% of the market (second only to PayPal). Having trouble figuring out how to connect a payment gateway to Shopify for example? Not to worry! Stripe’s integration with Shopify is simple.

Furthermore, Stripe operates in over 40 countries and accepts over 135 currencies, allowing your consumers to pay in their currency while you get payments in yours. Stripe Checkout is ideal if you do not want to create payment forms from scratch. It is a payment form that can be embedded into a desktop, tablet, and mobile device. Customers do not leave your site to finish the transaction because they store their payment information with Stripe. Stripe is quickly becoming a household name in the business, and for good reason.

Square

One of Square’s biggest features is how simple it is to set up. Users can install the program for free on any iOS or Android device and accept payments using a free plugin mobile credit card reader provided by Square. Merchants may accept credit card payments with only a smartphone or tablet, making it ideal for food carts, farmer’s markets, craft stalls, and other mobile merchants.

Braintree

Braintree is a payment gateway that combines flexibility, security, and customization. It was purchased by PayPal in 2013 when the online payment giant realized the potential of its competitor. Braintree accepts international payments in over 130 currencies in over 45 countries and regions worldwide.

Wepay

WePay is a bit of an enigma in the digital payment provider market, but it is still beneficial for enough small eCommerce business owners that we placed it on this list. The uncertainty stems from WePay’s failure to make its pricing plan transparent. If you are interested, you must contact them directly for a quote.

Having said that, Wepay has a plethora of appealing features. There are no cancellation costs, for example. That’s correct. Unlike most other payment gateways, you will not be fined if you choose to stop using WePay’s services

Conclusion

Choosing a payment gateway provider will be one of the first milestones in your trip through the world of retail businesses. With this information cutting down the list of payment solution alternatives, you’ll be ready to conduct additional studies and choose the ideal solution for you.

__________________________________________________________

Richard has been an enthusiastic writer in the retail industry for more than 3 years. He mainly writes about how POS solutions help retailers improve their business efficiency and maximize profit. With long-year experience, Richard never stops updating his industry knowledge so that he can spread it to the world and help people realize the true potentials of having a digitalized POS system in this modern age.

tech
Archives, Features, Global Trade Daily, Stories

LEAVE IT TO TECHNOLOGY TO MEET MODERN CHALLENGES: PART I

Leave a comment

To be honest, incorporating more technology into business as usual for logistics, supply chain and manufacturing entities pre-dates the first confirmed COVID-19 case in the U.S. in January 2020. But it did take the global pandemic to propel many in those industries to move unrealized digital transformation initiatives to their front burners.

In light of Industry 4.0, which places a high value on robotics, clean technology, renewable energy and transforming traditional factories into smart ones using the Internet of Things (IoT) and cloud computing, InfinityQS International announced the findings of its 2021 Customer Satisfaction Survey on June 1. 

The report from the Fairfax, Virginia-based authority on data-driven enterprise quality revealed that more than half of manufacturers now have their sights set on digital transformation to address concerns brought about by the COVID-19 pandemic. Behold:

-52 percent of respondents reported they are currently exploring or already adopting digital transformation initiatives to enhance operational performance. 

-24 percent cited advanced analytics as their top technology priority.

“The pandemic exposed significant and often widespread operational weaknesses within incumbent manufacturing environments,” said Jason Chester, director of Global Channel Programs at InfinityQS. “It brought into sharp relief where legacy systems and outdated processes exacerbated the problems that manufacturers faced, alongside new challenges such as the rapid shift to remote work and supply chain disruption.”

Digital transformation is the key to addressing these new challenges, according to Chester. “Data, for example, is a great way for manufacturers to increase visibility into their operations as it can provide important insights into each stage of the production process. These insights can then be leveraged to make more informed and tactical decisions to secure long-term resilience and growth.”

In addition to advanced analytics, the other most popular technologies on the priority list for respondents included the Industrial Internet of Things (IIoT) and cloud computing. InfinityQS notes that either technology supports anytime, anywhere access to real-time data for proactive decision-making, enabling manufacturers to maximize performance, respond to fluctuations in demand, ensure flexible operations and even build resilience for future “black-swan” events—all while maintaining high levels of product quality and safety.

“For manufacturers to stay ahead of competition and remain at the top of their industry, they need to constantly adapt to their environment by making tactical digital investments,” Chester says. “It is great to see the majority are rebounding from the pandemic and embracing digital transformation to increase their agility and maintain competitive edge. Companies that do so are better equipped to improve their operations at a faster speed and even anticipate changes before they occur.”

A clue that an impactful industry change was on the way happened during the March 2020 MODEX show in Atlanta, where attendees were warned they may have been exposed to someone with COVID-19. Folks can be forgiven if they were too preoccupied with personal health to consider the findings in the annual Materials Handling Industry (MHI) Report that was released during MODEX. According to the report (which you can read more about in our Industry Expertise column):

-67 percent of survey respondents said they believed robotics had the power to disrupt their industry and offer a competitive advantage for their organization. 

-39 percent of surveyed companies said they’d adopted robotics and automation. 

-73 percent of those surveyed said they plan to add more robotics or start implementing robotics in the next five years.

For a look ahead of the curve, Global Trade identified industry players who confronted a recent challenge with the help of technological partners. Our case studies are arranged by the categories Global Trade covers on the regular, from 3PLs and e-commerce to intermodal and air cargo logistics. Read on for part one. 

3PL

Company: KSP Fulfillment of Fridley, Minnesota

Challenge: Rapid growth putting pressure on order fulfillment

Problem Solver: Softeon of Reston, Virginia

Solution: Cloud-based warehouse management system (WMS)

Founded in 2012 and headquartered near Minneapolis, KSP offers a broad mix of 3PL services to multiple industries, including medical, health & beauty, education, agriculture and pet care. The Verified Veteran Owned Business has realized rapid growth, with revenues jumping 296% in 2020. That is, of course, the goal, but … 

Why is there always a “but?” 

The mountain of increased orders drove the need for additional space, and KSP is set to complete construction on a new 182,000-square-foot facility in November. However, the KSP brass also realized they needed more than additional real estate. 

“The company determined it needed a new WMS with the ability to scale, more advanced features and a better platform for continuous improvement,” explains Dennis Nicholson, vice president, Business Development at Softeon. “KSP selected Softeon as its WMS provider to help power execution of their aggressive strategy, making their decision to move to Softeon in less than two months.”

KSP was ready to move even sooner, to hear CEO Rob Walters tell it. “It was obvious in the early stages of our WMS vetting process that Softeon was going to be the right fit for our short and long-term business goals,” he says. “It was incredibly important that we chose the right strategic partners to ultimately support our customers’ needs. Softeon offers a unique combination of rich WMS functionality, robust support for 3PLs and a collaborative partnership that matches well with our culture.” 

It’s not just smaller company cultures that Softeon meshes with, having also provided a WMS solution to Germany’s DB Schenker, which is, of course, one of the world’s largest providers of freight forwarding and logistics services

AIR CARGO LOGISTICS

Company: American Airlines Cargo of Fort Worth, Texas

Challenge: Expanding temperature-controlled shipments across the entire mainline fleet 

Problem Solvers: CSafe Global of Dayton, Ohio, and CargoSense of Reston, Virginia 

Solution: State-of-the-art packaging and temperature sensors

One lesson American Airlines Cargo learned from the pandemic was that operating one of the largest cargo networks in the world made one no more prepared to handle the huge demand for distributing temperature-critical vaccines, pharmaceuticals and other life science products than Uncle Eddie’s Crop Duster Inc.

Though the new normal is getting more normal currently (knock on Formica), the demand for temperature-controlled cargo solutions is not going away. That even newer normal propelled American to enter into a number of tests and trials in partnership with CSafe Global and CargoSense. The result: All of American’s aircraft offered ideal environments for passive temperature-sensitive shipments thanks to CSafe’s industry-leading packaging and CargoSense’s Temperature Loggers.

The even more amazing result: American’s ExpediteTC solution, which was founded in 2009 to provide active and passive shipping solutions as well as a global network of temperature-controlled facilities, can now nearly double its capacity. The airline has now extended its cold-chain solution network to 30 new stations, including in-demand cities such as Memphis, Pittsburgh and Cincinnati. 

“When it comes to cold chain shipments, reliability is crucial for our customers,” explains Roger Samways, vice president, Commercial for American Airlines Cargo. “By expanding our offering of temperature-critical shipping on all mainline flights, we are able to provide our customers with access to more than 180 markets, marking the largest cold-chain network in our history.”

During the trials, sensors monitored internal package temperatures while aircraft operated in various climates. Results proved that temperatures of each package stayed constant, despite changing conditions during transit, according to the partnership.

 “We are excited the pharmaceutical industry can now leverage American’s full fleet at a time that is critical for all of us,” says CargoSense CEO Rich Kilmer.

Added Tom Weir, CSafe Global’s chief operating officer: “It was a privilege to work with American to conduct these trials and leverage our innovative thermal shipping solution technologies to ensure even more temperature-critical shipments can travel effectively. Many sensitive, often life-saving goods travel the world thanks to effective cold-chain networks, and we are proud to play a part in that alongside American Airlines.”

BANKING/FINANCE

Company: Old Dominion Freight Line of Thomasville, North Carolina

Challenge: Streamline payments to improve satisfaction among 10,500+ drivers 

Problem Solver: Relay Payments of Atlanta, Georgia

Solution: Instant electronic payments 

Motor carrier and industry leader Old Dominion provides regional, inter-regional, and national services that include expedited transportation through an expansive network of service centers throughout the continental U.S. as well less-than-truckload (LTL), container drayage, truckload brokerage and supply-chain consulting across North America.

However, Old Dominion lived up to the . . . ahem . . . “Old” part of its name by, like many of its peers, relying on cash and checks to conduct business. With manual payment processes creating a sub-optimal experience for customers, OD turned to Relay Payments, which recently received a $43 million infusion from venture capitalists who share the fintech company’s vision of building an electronic payment network in the transportation, logistics and supply-chain industries.

“We strive to deliver best-in-class customer service and are always looking at ways technology can improve our offerings,” explained Todd Polen, vice president, Pricing Services, at Old Dominion. “Working with Relay Payments has allowed us to remove tedious and manual steps throughout the payment process and modernize the way we do business with our customers.”

Relay’s partnership with OD’s accounting, pricing and operations teams is paying dividends, thanks to the development of unique application leveraging data integrations and custom payment workflows for each department’s specific needs. “We have entrusted Relay to process millions of dollars in volume annually,” Polen notes, “and we’ve already been able to realize millions in savings through data integration, digitalization of receipts and simplified reimbursements. On top of it all, our customers are happier than ever which is the most important to us.” 

“Our goal was to design an end-to-end solution which eliminated the use of paper-based payments and introduced operational efficiencies and increased revenue for the organization,” says Relay co-founder and President Spencer Barkoff. “We’re excited to continue working together to change the industry and keep America’s supply chain running during a period of immense challenge.”

E-COMMERCE

Company: Hermes Fulfillment of Hamburg, Germany

Challenge: Incorporate state-of-the-art technology to legacy warehouse management systems

Problem Solver: ProGlove of Munich, Germany, and Chicago, Illinois, and Ivanti Wavelink of Salt Lake City, Utah

Solution: Wearable barcode scanners and backend digital systems

Hermes Fulfilment handles the entire shipping process—including customer orders, warehousing and returns—for parent company the Otto Group’s retail companies. Besides multiple locations in Germany, Hermes has logistics, e-commerce and distribution facilities across all of Europe.

After identifying the need to upgrade technologically, Hermes officials sought an “out-of-the-box” solution: 150 of ProGlove’s wearable MARK Display barcode scanners that are married with Ivanti Wavelink’s Velocity backend/warehouse management systems.

This combo platter allows for easy integration of Telnet and browser-based applications to communicate and deliver crucial information to and from workers’ rugged mobile computers and wearable devices. 

“ProGlove’s MARK Display is a giant leap forward in barcode scanning,” says Simon Storey, Ivanti’s Global VP of Strategic Alliances. “Their devices come with a unique form factor that is tailored to meet the needs of warehouse shop floor workers superbly.”

His company’s Velocity platform helps improve accuracy and efficiency without modifying or replacing legacy backend systems, all the while maintaining and improving worker productivity. This helps reduce picking errors, decrease downtime and increase productivity without frontline workers needing additional training as they continue to work with the tools with which they are familiar. 

“The cost, risk and time associated with writing new mobile applications to keep up with modern mobile operating systems just isn’t feasible,” Storey explains. “We make it easy for their customers to deploy next-generation mobility, minimizing the risks and dependence on IT resources.”

“Ivanti’s Velocity set of solutions is a mission critical engine to boost the digitization of the shop floor,” remarks Charlie Grieco, ProGlove’s chief revenue officer. “While many organizations recognize the need for more flexibility and adaptability, they cannot just shake off the legacy systems they have in place. Ivanti resolves this issue so that businesses can change gears and accelerate to warp speed in no time.”

ICO
Archives, Banking, Global Trade Daily

Crucial Things You Need to Know About ICO in Crypto

Leave a comment

ICO is an acronym that needs to be known by anyone who wants to venture into the crypto world. This stands for Initial Coin Offering, and it is the most common way in which cryptocurrencies are created. Most of the cryptocurrencies that are making rounds and being traded today started as ICOs. The inception of an ICO for any cryptocurrency begins with just an idea by an individual or group of people who intend to build a token or coin. A token or coin could represent a lot of things. This could range from an asset, unit of value, or even utility that goes onto a blockchain. The brains behind this token or coin can then proceed to create an ICO. It is important that every ICO owner properly outlines the coin’s purpose and offers precise information to convince their target market that it will succeed and has prospects of being very useful.


 

In a situation where this goes as planned and works out as it should, that is the point where the general public can decide if they think the project has potential and is worth investing in. In this case, anyone may purchase the project’s first utility token. By purchasing these tokens, they participate in the project at hand and acquire a piece of ownership. An ICO must have a fundraising target to begin the project, and once that target has been reached, the project may begin. People who purchase these tokens have hopes that the coin will experience growth and eventually be worth more in the future when the project actually begins.

What Do I Need To Know About ICOs?

Considering what is stated above, you can understand the meaning of ICOs and their vital role in cryptocurrencies. The information helps answer the very common question, what is an ICO in crypto? We could say beyond reasonable doubt that creating ICOs seems like a great system to raise capital for certain upcoming projects. However, many ICOs have grown to have a bad reputation due to previous scams and technical issues. Furthermore, it is undeniable that some ICOs have been enormously successful, but it is also important to recognize the signs of a risky project. A couple of things that should be considered and properly looked into include:

White Paper

This is the first step that anyone researching an ICO is to carry out. A vague or poorly written and improperly planned white paper may be the clearest sign that the project is not fully looked into, lacks proper planning, and has the potentials of crashing. Therefore, it is extremely important to investigate the team and any business partnerships.

An experienced team will have a stronger chance of navigating the challenges of a competitive business environment. It is essential to thoroughly read and analyze and assimilate the white paper of a prospective investment because this document outlines the aims and strategies of that project and all it entails in detail. Some projects might have stratospheric ideas but are void of a practical approach for achieving those goals. Others may lack crucial details that leave you wondering whether the project is truly feasible or it is the sham that it looks like.

Although a good white paper is not a guarantee that the ICO will be a success, an incomplete, hastily written, problematic, and improperly planned one can be a sign of trouble to come. Glaring issues with spelling, formatting, or grammar can also be considered red flags. Conversely, if you’re preparing a white paper for your own ICO, it is important to expect investors to pore over every detail.

Evaluate The Quality Of The Code

It is a major red flag if a project has no working code before an ICO, or even if they do, it isn’t open source. If you are privileged to have even a little bit of programming experience and have the ability to read a code, you should do so when evaluating an ICO. You can understand a lot about a project and its developers by properly studying and analyzing their code.

Learn From VC-investors

Many venture capital investors make their living on investments, which gives them the right to be the pickiest contributors. They are very careful about examining everything about the project with just one very particular thing in mind: how much profit will this investment result in? Aside from everything involved, there is behavioral science involved here: a consensus in the VC world is that it’s never good for a startup to receive too much money very quickly, as they will be compelled to spend the funds just because they’re available.

Everyone has the right to launch an ICO due to its ease and lack of regulation in most countries. This means that as long as you can get the tech set up, you are totally free to try and get your currency funded by people who are interested in your plan because they dim it feasible. Since there is no proper regulation, it simply means there is nothing stopping anyone from doing all the work to make you believe they have a great idea and then end up absconding with the money without actually implementing the plan.

Before investing your money, you should ensure that you do proper research and take your homework seriously because ICOs are barely regulated. Therefore, you need to be way more careful than you would be when investing in an IPO. Read the white paper properly,  research the team members, and make sure they have a history in cryptocurrency.

banks
Archives, Banking, Global Trade Daily, International Banking

TOP 10 BANKS FOR GLOBAL TRADE 2021

Leave a comment

It is strange to think that there had been an optimistic outlook for global trade ahead of 2020. Circle back to the end of 2019, and that was the case, with global recovery expected off the back of a sluggish year.

The COVID-19 pandemic, described by IHS Markit as the largest black swan event since The Second World War, quickly dashed any chance of such a rebound being realized. Instead, lockdowns, restricted movement across borders and sweeping economic and social uncertainty—coupled with uncertain U.S. trade policies, Brexit and other external factors—saw 2020 become a year like no other.

Indeed, global trade was forced to adapt and continued to serve as a vital lifeline that helped to keep supply chains flowing and boost confidence wherever possible.

Banks played a vital role. They accelerated digitization strategies, with technologies such as blockchain and artificial intelligence further coming to the fore over the past 12 months. As ever, they altered their offerings, and each became more or less attractive to those corporations partaking in global trade. 

Here, we reflect on these offerings and rank the top 10 banks for global trade in 2021. 

The banks in this list are not acclaimed based on the volume or value of transactions. Rather, they have been recognized owing to their commitment to service–through innovation, targeted solutions and meeting the specific cross-border trade needs of those corporations that they serve.

Size and stature do not always equal best-in-class. Many of the banks listed here are indeed major players, but we have focused on those institutions harboring some of the key qualities to look for when selecting a provider.

A series of different criteria have factored into this, including:

-Competitive advantages

-Pricing

-Product and service innovation

-Financial robustness and security

-Knowledge of local requirements and conditions

-Customer satisfaction

-ESG compliance

Citi

Citi is globally renowned, currently operating in more than 90 markets and transacting in over 130 currencies. 

The company prides itself on a knowledge and understanding of local markets–a skillset that is particularly useful to those embarking on expansion across borders or looking to ramp up trade activities in new countries. It tailors its services to each region and country rather than taking a one-size-fits-all approach. 

Citi is also a key figure in driving global industry technological transformation. Its digital toolkit comprises key connectivity solutions such as integrated APIs (application programming interfaces), and it has also positioned itself as leading innovator in the usage of blockchain. 

HSBC

Where global trade is mentioned, HSBC is never too far behind. The bank recently took the top spot in Euromoney’s Trade Finance Survey for a fourth year running, testament to its ongoing investments into further financial skills, digital capabilities, and product innovation. 

The bank actively positions itself as a thought leader with the publication of key export insight reports, while its Trade Forecast Tool imparts crucial short- and long-term knowledge on prospects in key markets whilst prioritizing user-experience. 

Its services include a renowned Ex-Im Bank Working Capital Guarantee Program alongside currency exchange, documentary collections, export collections, FX trading, trade credit insurance and more. 

UniCredit

UniCredit offers a wide variety of global trade finance services including global securities services, export finance, internet banking and transactional sales via its Global Transaction Banking business. Despite being built on a network of more than 4,000 key banking relationships that span 175 territories globally, the bank primarily caters to its core customer base in 14 core Central and Eastern European markets alongside 18 other countries worldwide.

The firm is renowned for its innovative attitudes toward product development including its award-winning Trade Finance Gate client portal, and market leading customer service. 

Deutsche Bank

With 130 years under its belt, Deutsche Bank is one the most experienced providers of finance for global trade. Its integrated global network spans 80 locations in 40 countries, its primary area of expertise being the navigation and management the risks associated with import, export and domestic trade transactions. 

The company has a strong presence in key emerging markets spanning Asia Pacific, Central and Eastern Europe and Latin America. Here, it imparts key services including advisory and distribution services, documentary collection, documentary remittances, financial supply chain solutions, letters of credit, standard remittances, structured commodity trade finance, syndicated trade loans and trade receivables finance.

Standard Bank

Plaudits can be paid to South African figurehead Standard Bank in the realm of technological innovation. The firm leverages APIs to connect its internal systems with those of its clients. As a result, approximately 80 percent of its issuance procedures for lines of credit and guarantees are automated, with average execution time of just one minute.

The company excels in trade document management. Its core services include trade finance open account and supply chain solutions, documentary trade finance and international payments, and it’s also working closely on product development with fintech partner Traydstream.

Santander Group

Santander has positioned itself as a leading light on environmental, social and corporate governance, and is a truly valuable player in the global trade community. During the pandemic, the company sought to deliver solutions that would dampen economic hardships by addressing the needs of the individual countries in which it operates, offering financial assistance to SMEs that reached a peak of $1.2 billion daily between April and May 2020.

The company also reacted dutifully in other ways, namely through the development and deliverance of various digitization projects that prioritized public health. 

ING Group

With its 57,000 employees serving 39.3 million customers, corporate clients and financial institutions in more than 40 countries, the vast majority of ING’s business is conducted in European markets. The company offers an array of international payments, cash management and trade finance services including letters of credit, documentary collections and guarantees.

ING Group is an initiating member and key investor in Contour–a trade finance project seeking to transform the status quo through the deployment of blockchain-based technologies. 

Bank of America

As the name would suggest, Bank of America remains a stalwart and fan favorite serving the North American market. During the pandemic, the firm introduced its Intelligent Treasury Roadmap–an initiative built to optimize client treasury operations and working capital.

Through operational simplification and ongoing advisory expertise, the bank’s Global Transaction Services team was able to successfully help clients mitigate risk and detect and manage fraud during what was both a turbulent and opportunistic period.

BNP Paribas

BNP Paribas remains one of the top trade finance banks globally, operating more than 100 dedicated trade centers in 60 countries. Among its core specialties are the bank’s export and import services and solutions built to optimize cash conversion cycles.

The firm primarily prides itself on imparting key knowledge and expertise. Its network of 350 trade finance experts is readily leveraged to provide tailored training programs based on the location and requirements of individual client companies.

Commerzbank

Commerzbank’s headline figures include 50 billion pounds in trades spanning 150 markets and 50 currencies annually. Albeit an established player with a 150-year legacy, the firm has proactively invested in new technologies including that of blockchain. 

To this end, 2020 saw the company mastermind the first Turkish-German trade finance transaction of the Marco Polo blockchain network alongside Isbank.

seed funding
Archives, Banking, Global Trade Daily

How to Raise Pre-Seed & Seed Funding: 5 Alternative Strategies

Leave a comment

Want to learn how to raise seed funding for your startup? You’re in the right place.

For growth-focused startups, getting access to capital early means that you can scale faster.

The seed round is the first official stage of equity funding. That means that you can expect to give up some ownership, typically in equity or a convertible note, in exchange for capital. (Earlier pre-traction rounds are sometimes called “pre-seed” funding, and may consist of a “friends and family” round, or acorn round.)

But how can you raise seed funding, or even pre-seed funding?

Venture capital is an option, albeit a longshot. Research shows that less than one percent of startups get VC funding. Of that fraction, just 2.2% of funding went to Black founders, and only 2.7% went to female founders. Plus, this process of pitching to VCs often takes months or even years. For many founders, VC funding isn’t really a viable option.

At this early stage, it’s unlikely your startup will qualify for a bank loan. Banks typically look for 3+ years of business history before even considering extending credit.

So if you’re an ambitious founder who doesn’t fit the mold, how can you raise pre-seed or seed funding?

Fortunately, a new wave of seed funding sources is emerging, designed to be more accessible and more founder-friendly. Here are 5 alternative ways to get seed funding for your startup.

Republic

Republic leads the venture crowdfunding space. It’s a platform app that lets startups raise capital through crowdfunding from individual and institutional investors. Said more simply, it’s Kickstarter for startups.

This crowdfunded approach lets startups raise pre-seed and seed funding from a healthy network of enthusiastic investors, without needing to spend hours on pitch meetings.

Republic does require startups to go through a tough screening process; only around 5% of startups will be accepted. That said, they do offer a unique opportunity to get in front of a lot of different investors quickly, without needing to pitch each individually. It’s a tough but streamlined way to get seed funding for your startup. Learn more about how they evaluate startups here.

If you decide you want to apply, you can do so here.

Chisos

Here at Chisos, we’re offering a brand-new way of investing in idea- and early-stage startups through a two-part approach we call a CISA. The CISA is a unique combination of equity and an income share agreement. Unlike other investment options, you can qualify for pre-seed and seed funding from Chisos even before you have a product or any revenue.

We’ve designed the CISA to be fair to founders. Here’s how:

-Repay the CISA with a percentage of your income, but only when that income is above $40K.

-When you repay the CISA, you’re also buying back some of the equity initially granted to Chisos.

-You have complete freedom to use the capital as you see fit.

-You’ll never pay more than 2x the original investment amount, adjusted for inflation.

We’re built on the idea that funding shouldn’t be limited to a tiny handful of founders. Instead, we’re on a mission to democratize entrepreneurship.

We’re writing checks of $15,000-50,000 to invest in idea-stage startups and side-hustle businesses. Want to see if you qualify for pre-seed or seed round funding?  Apply here.

KnowCap

If you’re planning to use seed funding to hire a team, why not skip a step and trade equity for expertise? That’s the thinking behind KnowCap. KnowCap connects companies to a team of startup experts that cover key functions, including marketing, sales, engineering, and strategy.

These experts work directly with founders to provide coaching, strategic guidance, and in many cases, actually creating value by building an MVP of the product, creating new brand identity, and setting up calls with potential customers. In exchange for access to this “knowledge capital,” founders grant KnowCap equity.

While it’s not pre-seed or seed funding in a traditional sense, it’s a great alternative to help founders build a strong foundation from which the company can grow.

Learn more about KnowCap here.

Zebras Unite

Zebras Unite is a startup co-op that’s built explicitly to serve founders that traditional VC overlooks and undervalues; namely, women and people of color. What started as a community has evolved into a source of capital.

You’ve probably heard startups described as “unicorns”; Zebras Unite is an intentional rejection of the unicorn model of success. (You can read more about this concept here.)

Zebras Unite is the place for founders who believe that business should support society, rather than define it. If you’re building a community-focused, mission-driven organization, you’ll probably feel right at home in the Zebras Unite ecosystem.

To be considered for funding, join the Zebras Unite online community.

State & Federal Startup Grants

There is a bevy of grants for early-stage startups and small businesses. Unlike most other seed funding sources, grants don’t require you to give up equity or pay the money back.

Startup grant programs typically focus on serving otherwise underserved groups, such as minorities, veterans, people from rural communities, and non-profits. They also typically focus on advancing specific sectors, like education, technology, and healthcare.

Unfortunately, there’s no central database that covers all available grant opportunities, so you’ll need to spend time researching if you pursue this path. Here’s a list of a few good places to start, including:

Grants.gov

OpenGrants

Challenge.gov

SBIR.gov

So that’s it! Now you know 5 new ways to raise seed funding for your startup.

_____________________________________________________________

William Stringer is the Co-Founder and CEO of Chisos Capital, a company that invests in ideas, and the founders with potential to bring them to life. Through our proprietary investment approach, the CISA, we write checks to idea- and early-stage entrepreneurs. Inspired by the desert oasis of the Chisos mountains, Chisos Capital seeks to democratize opportunity.

blockchain technology
Archives, Banking, Global Trade Daily

Solving Supply Chain and Security Problems with Blockchain Technology

Leave a comment

In the last few years, blockchain has become a buzzword in the tech industry. The concept entered the public consciousness through Bitcoin, which uses a specific blockchain as a core component of its consensus algorithm. Back in 2017-2018, many experts were proclaiming “blockchain, not Bitcoin,” while today, Bitcoin’s latest meteoric rise and ensuing crash has flipped that narrative on its head. But while blockchain technology is often associated with cryptocurrencies, its application is powering the fourth industrial revolution and mainstreaming applications. In cybersecurity, blockchain technology can help improve security and resiliency, at a cost.

To understand blockchain-based cybersecurity, one must first understand some basic principles of how a blockchain works. A blockchain is one form of distributed ledger technology (DLT), meaning that it is used in distributed systems. Distributed systems offer greater resiliency than centralized systems since a decentralized network has no single point of failure, but that resiliency comes at a cost. Without a single source of truth for the network, reaching consensus can be difficult. A blockchain typically serves as part of that consensus mechanism—establishing a reliable record for the system to use.

Implementations vary between different blockchains, but in general, a blockchain takes some chunk of data and connects it cryptographically to the previous chunk of data, forming a chain of data blocks—a blockchain. That data can itself be encrypted using public-private key pairs so that only authorized users (or owners) can access the records.

Typically, each block of data includes a header, which summarizes the contents of the block. That header includes a cryptographic hash of the previous block’s header, and that hash forms the link between each block. Because each block builds on and explicitly references the contents of the previous block, a properly implemented blockchain is extraordinarily difficult to alter. In order to change a block’s data, every block after that block must also be edited to build on the new hash of the altered block. Consequently, older blocks are much harder to change than newer blocks.

The immutability and decentralization of a blockchain make it well-suited to certain applications. For example, financial institutions can benefit from unambiguous, cryptographically provable ownership records. Bank of America recently announced that it joined the Paxos network to speed up settlement times for stock trades, while JPMorgan has settled billions of dollars of transactions on a private version of Ethereum. From healthcare records to private genetic data, blockchain technology is also revolutionizing the medical industry. Legally, blockchain implementations could help businesses by providing a reliable, auditable data record.

As we digest the takeaways from the late spring 2021 crypto-crash, gas fees required to process transactions over Ethereum blockchain networks and environmental costs associated with Bitcoin mining need to be reexamined. But what are gas or transaction fees? While “gas fees” refers to the computing power required to securely execute a transaction on the Ethereum blockchain, they can be analogized to the transaction fees to process any crypto-currency transaction. On the Bitcoin blockchain, fees are required to pay the network’s miners to accept and verify a transaction.

While these gas fees and mining fees are an essential part of the security behind the scenes, they have become substantial deterrents to the growth of the digital asset marketplace. Startups that can create cost-savings in gas or mining fees to process transactions will be well-positioned to lead the next generation of blockchain security solutions.

If your company is considering implementing blockchain technology, consider carefully what information needs to be stored. My advice is to evaluate whether you need to use a blockchain. It is a powerful and useful technology, but it is not the right tool for every job, regardless of how popular it is. Unlike a traditional database, data stored on a blockchain effectively cannot be altered, so you need to make sure that whatever records you include compliance with all applicable laws and regulations. A mistake here could be extraordinarily difficult to fix. In some industries, the benefits will be well worth the risks. In other industries, the transaction costs need to first come down.

Some solutions to consider for industries where blockchain makes sense today:

-Bide your time. Wait it out. The market is evolving rapidly, decentralized and dynamic. With so many costs with no consolidation, new competitors are entering the market every day, and chances are that fees will reduce as a percentage of the transaction over time.

-You could also look for new blockchains or wrappers that “wrap around” existing blockchains to support more transactions, relieving congestion and offering lower fees.

-Partnering with value-priced wallets offering scaling technologies enabling lower fees is also an avenue to explore.

In the end, blockchain cybersecurity simply leverages the immutability and decentralization of a blockchain to make tampering with data more difficult while reducing centralized points of failure and giving users more control over their data. Ignore the hype, and evaluate whether this technology is right for your use case. Periodically reevaluate. This is a dynamic technology, and so is the market.

_______________________________________________________________

Louis Lehot is an emerging growth company, venture capital, and M&A lawyer at Foley & Lardner in Silicon Valley.  Louis spends his time providing entrepreneurs, innovative companies, and investors with practical and commercial legal strategies and solutions at all stages of growth, from the garage to global.

mobile wallet
Archives, Banking, Global Trade Daily

Mobile Wallet Market: Top Emerging Trends Fostering the Industry Growth through 2026

Leave a comment

The mobile wallet market is set to register significant growth during the forecast period. Mobile wallets and mobile banking have gained a lot of importance in the past few years due to the increased internet penetration in various industries across the world. There are many benefits associated with using mobile wallets like convenience in making payments, higher safety while keeping all card-related information at one place. The youth population across the world prefers to use these wallets instead of carrying physical ones as they can have easier and safer access to their money.

The banking industry in developed regions like North America and Europe has undergone tremendous transformation with the introduction of mobile banking transactions. Banks and other financial institutions today are introducing their own mobile wallets to enhance customer experience and increase their customer base as well. They are targeting the millennial generation as they are the largest users of digital banking services.

Online shopping and other e-commerce activities have witnessed robust growth, especially during the COVID-19 pandemic. The lockdown restrictions imposed by various governments across the globe has led to increased dependence on these online platforms to make their daily purchases and carry out other transactions. This has led to a sharp spike in the demand for mobile wallets to help customers conduct their transactions with ease.

The trends that will foster global mobile wallet market size are listed below:

Open mobile wallets will witness hike in demand in Europe:

Europe mobile wallet market is reported to be worth a whopping $60 billion by the end of 2026. Open mobile wallets will see robust demand among the regional population. In fact, this segment is expected to grow at a CAGR of 15% during this time period. Open mobile wallet is a type of virtual wallet with the help of which one can make payments, withdraw money and conduct several other transactions.

Europe is known to have one of the most advanced digital banking infrastructures in the world. Banks in the region use state-of-the-art technologies to make everyday banking convenient for customers. The traditional banking system is facing some serious competition from fresh fintech start-ups, resulting in the introduction of open mobile wallets and other modern banking technologies to retain customers and expand their business.

European device manufacturers adopt mobile wallets:

Banks, tech companies, telecom operators and device manufacturers constitute the users of mobile wallets in Europe. Out of these, the device manufacturers will increasingly adopt mobile wallets in the region. This segment is reported to grow at 20% CAGR through 2026. One of the main reasons cited for this is the rapid increase in demand for smartphones among the young population.

This demand has skyrocketed to such an extent that countries like France, Italy and Germany had almost 150 million smartphone users in 2019 alone. It is even being reported that 80% of the transactions will be done via internet-backed devices by the year 2025. There are several smartphone manufacturers that are introducing mobile wallet technologies by creating in-built apps to cash in on the growing demand.

Scope of the U.K. mobile wallet market:

Among the several countries in Europe engaged in providing digital banking services, the U.K. is reported to showcase promising growth by 2026. The country even held a market share of more than 20% in 2019 and this figure is projected to go even higher in the future. One of the main reasons for this is the rising awareness among customers about the concept and benefits of mobile banking.

These include higher convenience and transparency in operations, a wide variety of channels to make payments from, and many others. Key factors have prompted several traditional banks to revamp their offerings and introduce user-friendly mobile wallets to increase their customer base.

The use of closed mobile wallets will increase in North America:

Mobile wallet market size in North America is reported to exceed a staggering $80 billion by 2026. The closed mobile wallet segment is projected to show robust growth trends in the coming years in the region and will grow at a CAGR of 20% between 2020-2026.

One of the major reasons for this is the security issues arising from conducting online cash transactions. The risk of cyber-attacks is always present, and a major chunk of the creators of mobile wallets are not well equipped to handle these attacks, leading to heavy financial losses for the company and loss of customer confidence as well. This is why more customers prefer to use closed mobile wallets to keep their money safe.

Banks will be the largest owners of mobile wallets in North America:

Banks are reported to be the largest owners of mobile wallets in North America. In fact, this segment will capture a growth rate of 15% by 2026. One of the major reasons for this is attributed to the rising focus of banks to enhance customer experience by introducing them to convenient and transparent banking procedures.

There are several banking and financial institutions that are replacing their traditional ways of doing business with digital processes. Banks and customers enjoy several benefits like improved customer relations, increase in customer base, exponential market growth and increased customer confidence. All these advantages have made several banks to offer mobile wallet services in North America.

Mobile wallet use in emerging economies of Asia Pacific:

Asia Pacific mobile wallet market size will be more than $200 billion by 2026. Economies like India, Singapore, South Korea and China are going through a period of economic transition. This has caused increased demand for digitization in these countries, leading to creation of advanced technologies in the banking sector to foster economic growth. Since the regional population has become quite aware about the benefits of using mobile wallets, there is a substantial growth being seen in their demand.

There are many banks in Asia Pacific that are increasing their funding on research and development processes to introduce their own mobile wallets to provide convenience to customers in their transactions. All these factors will accelerate demand for mobile wallets in Asia Pacific.

Increase in NFC technology use in Asia Pacific:

Among several technologies being incorporated while creating mobile wallets, the Near Field Communication (NFC) technology will attract a high demand among consumers in Asia Pacific. In fact, this technology is set to witness more than 20% growth rate by 2026. One of the main reasons for this is that mobile wallets that are equipped with NFC technology have additional security and prevent unauthorized data transfer from one device to the other.

It even creates an encrypted and secure channel of communication between a POS system and the device and has message authentication system in place. The security features of this technology can be customized according to end-user requirements as well, leading to increased demand for mobile wallets with NFC.

Some of the reputed companies engaged in providing mobile wallet services across the world are American Express Company, Amazon.com Inc., Mastercard Incorporated, PayPal Holdings Inc., Wells Fargo & Company, Tencent Holdings Ltd., Google LLC and some others.

cybersecurity
Archives, Banking, Global Trade Daily

3 Biggest Threats to a Bank’s Cybersecurity

Leave a comment

Our world is changing. It is undergoing rapid and massive digitization. It would be safe to claim that we have the global pandemic to blame for that. However, we believe that we would have gotten there anyway given the trajectory of our current technological advancements.

Education, various business processes一almost everything can already be done online these days. The world has passed a point of no return and will never go back to what it was pre-pandemic. What has been made digital will remain digital. While this new normal does offer a lot of conveniences, it also presented a new set of challenges, particularly in cybersecurity. And of all the industries that have gone online, it is probably the world of banking that we are most concerned for. What are the financial problems that these changes will pose?

In this article, we are going to talk about the biggest threats to cybersecurity in the banking sector. Let’s start with the most basic: unencrypted data.

Unencrypted Data

Data encryption is the process of converting data from a readable format into a decoded one. Various institutions usually have their own specific codes. In this way, no one would be able to easily read their data outside the firm, should their data fall into the wrong hands.

Think of data encryption as both the vanguard and the rear of cybersecurity. An effective encryption process can deter people with malicious intent. And if they ever get their hands on the said data, they would still have to try to decrypt it anyway before it can be of any use to them. These added security measures can be truly valuable for any financial institution.

Malware

The next imminent threat is malware. While we have no doubt that most financial institutions work with competent cybersecurity agencies in order to protect their devices from being hacked, it is also true that this might not include their staff.

A breach into a system is still possible through a compromised employee phone. All he needs to do is to connect to the office’s computer network and a hacker can already begin accessing compromising information.

The same thing can happen when you’re collaborating with a third-party service. We understand how convenient it is to employ a third-party service. It can potentially save time, money, and other resources.

However, it can also expose your financial institution to certain risks if your partner doesn’t have effective cybersecurity measures in place.

The best solution to prevent potential attacks in this manner remains to be adequate employee training. Make your staff aware of the very real (and billion-dollar) repercussions of a security breach.

It is also possible to limit the access of your employees. Just let them access the minimum data that they need in order to perform their tasks. This is for their own protection as well.

Finally, running comprehensive background checks and being particularly careful with the people you hire will also help. Just make sure that your checks remain compliant to prevent any issues.

As for business partners, one should never be afraid to ask about potential partners’ cybersecurity efforts.

Data Manipulation

Another big concern is data manipulation. There are three ways in how your data can be manipulated. First, it can be stolen, copied, and distributed elsewhere, much like how hackers are able to create realistic company pages for phishing. This is called spoofing.

Data can also be deleted. This is particularly true for bigger financial institutions with competing firms. An attacker might not really have the intention to steal information but to mess up the system by deleting crucial bits of data.

Can you imagine the panic that will ensue if a financial institution suddenly lost all its client information?

Finally, data can be edited without the owner’s knowledge. Despite the common belief that data-stealing is the worst cybersecurity attack that can happen, we still believe data alteration worse. That’s because this attack is a bit difficult to detect right away.

It’s easy for bigger companies to detect if their data has been stolen and being used with malicious intent. Data deletion is a complete giveaway. You will learn that an attack has happened right after it did. There’s even a chance of stopping it halfway if you’re lucky to catch it early enough.

What makes data alteration particularly detrimental is the fact that it can’t easily be detected. A firm can go on for months without even knowing that an attack has happened. After all, the manipulated data may look unaltered on the surface, but the truth is, hundreds (if not thousands) of micro edits have already been made. If the hacker succeeds, the financial institution may be held liable to pay millions of dollars in damages.

How Imminent Is the Threat?

The cybersecurity threats that we have mentioned above are just some of the most common ones that financial institutions globally are faced with every day. It’s just the tip of the iceberg. There are definitely other forms of cyberattacks out there, and even more, being developed by the minute.

According to Mark Whelan, a banking expert from the Australia and New Zealand Banking Group, cyberattacks are more prominent and brazen than ever before. It has even reached the point that they are receiving up to 10 million attacks in a month.

For him, this is the biggest threat that financial institutions are currently facing, and experts predict that it’s only going to get worse.

Final Thoughts

Indeed, it is a brave new world that we’re living in. The risks and threats that we are facing right now are so stark in contrast to what we have experienced in the past. Gone are the days of bank heists with guns blazing. Instead, the bigger threat is probably wearing a sweatshirt right now in a random room somewhere across the globe. The fact that you wouldn’t have to take such a risk on your life makes the prospect even more appealing.

This has led financial institutions to prioritize cybersecurity efforts and training. Fortunately, with adequate risk assessment and planning, we are confident that you will be able to prevent severe cyberattacks from happening.

_______________________________________________________________________

Jim Hughes is a content marketer who has significant experience covering technology, finance, economics, and business topics. At the moment, he is the Director of Content at OpenCashAdvance.com.

work
Archives, Banking, Global Trade Daily, Special Reports

How Remote Work Lends Itself to Reshaping the Back Office

Leave a comment

The pandemic has been hard on everyone in different ways, and though the end is in sight, we’re not there yet. But, as we close in on a year and a half of working from home, we can look back with some perspective and perhaps a little pride at how we’ve adapted and changed. During this time, many people and organizations have discovered that they’re much more nimble, creative and resilient than they previously imagined.

I can see that in the accounts payable organizations with whom I have worked. The dual challenges of figuring out how to get payments out the door in a different way and learning to work remotely have been daunting, but people have figured out ways to get the job done.

Perhaps more than any other function, AP used to be a strictly in-the-office job, mainly because of all the paper processes they had in place. Invoices come in the mail. They have to be opened and keyed into accounting systems. Some companies have machines and OCRs (Optical Character Recognition) to help with this process, but many still follow manual processes. Checks must be printed, stuffed into envelopes, and run through a postage meter before they’re mailed. Security and controls are often paper-based, too—safes are kept for blank check stock and sensitive information.

It seems incredible to think that a year and a half ago, that was business as usual for the vast majority of organizations, and not many had plans to change. But change they have.

A New Way of Thinking

Nobody had a plan for sustained remote work. They may have had a short-term disaster recovery plan—for one or two people to work offsite or cover for the absence of a key employee. But nobody had a plan for the entire AP team to be out of the office indefinitely.

The initial struggle was to be able to continue processing payments on time. People brought their laptops home, but not their whole setup. They kept sending skeleton crews to the office to handle the paper processes. The thought was that we’d have to stick it out for a short period. We all know how that turned out.

Around the latter part of April 2020, we started to see people planning for the longer term. Companies set people up with home offices and all the security and connectivity they needed. They had to figure out new ways to communicate and collaborate. They had to figure out how to be productive at home, in many cases while juggling childcare and homeschooling.

At the same time, they started switching vendors to ACH payments in earnest. According to recent data from Nacha, the National Automated Clearinghouse, B2B ACH payments to vendors jumped a whopping 11 percent in 2020. They had to figure out new processes and new ways to keep information secure. Both of those are heavy lifts, which is a big part of the reason paper has persisted for so long.

It has been challenging to say the least, but I think that AP teams should be proud of how they’ve adapted.

Where to go from Here

Probably not back to the office—at least not five days a week. According to a recent report by Upwork, roughly one in four Americans will be working remotely in 2021. By 2025, 36.2 million Americans are expected to be working remotely, an 87% increase from pre-pandemic levels. A survey by the Pew Research Center found that given the option, more than half of employees say they want to keep working from home even after the pandemic abates.

Employers are becoming comfortable with the idea and are even finding some advantages, including access to a much larger talent pool and the ability to offer flexible work hours as a benefit. That could help AP to address the long-standing talent shortage.

The more significant opportunity, though, is to continue to think differently. I would be surprised if very many AP departments decide to return to the paper processes of old. The biggest reason people stuck with those for so long was that they were “working.” It’s hard to say that now. It’s also hard to say that accounts payable work can only be done in the office because we’ve been doing it outside the office for a year. The considerable delay in payment processing that some people expected never materialized. AP had to find a better way, and they did.

Moving Forward

They shouldn’t stop there. AP organizations should seize the moment to bring in technology partners to automate the entire payment workflow, address the growing fraud and security risks associated with ACH payments, and ensure the resiliency of payment workflows in a remote work world. They should be looking to automate invoice ingestion and processing and integrate into other transactional systems, eliminating manual work once and for all.

Nobody likes being forced to change, and that’s been perhaps one of the most difficult aspects of the experience we’ve all been living through for the past year. Now that AP teams have proven they have the resiliency and the ability to handle all the change that was thrust upon them, they should seize the opportunity to become drivers of change and key players in leading their organizations into the future.

 _________________________________________________________________________

Kim Lockett is Vice President of Customer Success and Services for Nvoicepay, a FLEETCOR company. She has more than 30 years of experience in payments, with a heavy focus on back-office operations and customer engagement. Prior to Nvoicepay, Kim held operations management and leadership positions with Comdata, Crestmark Bank, and Regions Bank.

payments
Archives, Banking, Global Trade Daily

HOW TO BETTER PREPARE PAYMENTS FOR FUTURE DISRUPTIONS

Leave a comment

A particularly virulent and nasty airborne virus, it has so far accounted for 2.5 million deaths worldwide with more than 110 million cases recorded at the time of writing. Given these numbers only represent reported incidences, the real tolls could well be substantially higher.

The pandemic has especially caught western societies on the backfoot. Unlike regions more used to infectious disease outbreaks such as Asia and Africa, the likes of Europe and North America have not had to deal with a public health threat of this kind since the Spanish flu disaster of 1918, a four-wave pandemic which is thought to have killed 675,000 people in the USA and 50 million worldwide.

Vaccinations are key to emerging from the worst of the crisis during 2021, both in terms of public health and the economy.

Regarding the latter, COVID-19 has been nothing short of a disaster. America has disproportionately suffered from the coronavirus: Not only does it have the highest registered death toll, but it is also forecast to lose trillions of dollars in revenue.

Predicting the size of the economic fallout is far from straightforward, and estimates vary tremendously.

According to a study by the University of Southern California, anywhere between $3 trillion and $5 trillion could be lost over the next two years, while economists at Harvard believe the pandemic will cost the U.S. $16 trillion, assuming it is over by this fall.

While uncertainty remains as to the exact extent of the financial damage, what cannot be denied is that the financial losses are and will continue to be enormous for years to come.

The second quarter of 2020 saw real gross domestic product in the U.S. decrease at an annual rate of 31.7 percent, the largest quarterly plunge in activity on record.

And one of the most worrying patterns emerging from 2020 is companies struggling to manage cashflows and stay afloat. Payments simply are not flowing through supply chains as they ordinarily would, an observation which is borne out by several reports and surveys.

For example, trade credit insurer Atradius reports in its annual Payment Practices Barometer that businesses across the USA, Canada and Mexico are facing widespread cash and liquidity pressures. Meanwhile, business credit information firm Cortera reported that in May 2020, large companies with more than 500 employees paid their suppliers 15.6 days late on average, up from around 10 days a year earlier.

Responding to economic disruption

So, how can companies safeguard themselves against this sort of financial disruption both now and in the future?

Paying particular attention to cash flow during times of crisis is essential if businesses are to emerge from this black swan event intact–even those that appear to be in strong financial shape, given the longevity of the demand and supply chain disruption being witnessed.

At the start of the pandemic, around March 2020, Deloitte released a series of advice papers on how supply chains can cope with the then anticipated fallout, one of these being “COVID-19: Managing cash flow during a period of crisis.”

“Given the importance of cash flow in times like this, companies should immediately develop a treasury plan for cash management as part of their overall business risk and continuity plans,” the report states. “In doing so, it is essential to take a full ecosystem and end-to-end supply chain perspective, as the approaches you take to manage cash will have implications for not only your business but also for your customers.”

Deloitte draws on lessons learned from the 2003 SARS epidemic, the 2008 global financial crash, and the 2011 Japanese earthquake, offering 15 specific practices and strategies for companies to better manage their cash flow.

15 ways to better manage your cashflow

1. Ensure you have a robust framework for managing supply chain risk.

2. Ensure your own financing remains viable.

3. Focus on the cash-to-cash conversion cycle.

4. Think like a CFO, across the organization.

5. Revisit your variable costs.

6. Revisit capital investment plans.

7. Focus on inventory management.

8. Extend payables, intelligently.

9. Manage and expedite receivables.

10. Consider alternate supply chain financing options.

11. Audit payables and receivables transactions.

12. Understand your business interruption insurance.

13. Consider alternate or non-traditional revenue streams.

14. Convert fixed to variable costs, where possible.

15. Think beyond your four walls.

*Source – Deloitte, “COVID-19: Managing cash flow during a period of crisis”

Among them is advice to extend payables–in other words, take longer to pay suppliers. However, Deloitte warns against delaying payments without prior agreement with customers, urging dialogue between both parties to ensure the supply chain is as minimally disrupted as possible.

Indeed, companies may wish to bring forward payments to suppliers if it prevents them from going out of business, the consequences of which being far costlier than using up some of your own cash reserves early.

As a supplier, offering dynamic discounting solutions for those able to pay more quickly could be a way to improve your cash flows; by using this technique, you are essentially paying customers to provide you with short-term financing. Going down this route could be expensive in the long term, but it could be the only viable option if other financing methods are not available.

Perhaps the most important, albeit least tangible piece of advice is to think outside of the confines of your own business. Rather than simply focus on your own operations, companies should think about how their actions will impact the wider supply chain ecosystem.

A further question revolves around the ways in which payments are being made.

COVID-19 has accelerated the adoption of digital and automated payment methods. For instance, according to research by digital transformation platform MX, there has been a rise in mobile banking engagement of 50 percent since the end of 2019.

The U.S. has been behind the curve on supply chain financing for quite some time. Widescale adoption of electronic, data-driven invoicing will create fluidity and working capital for both suppliers and buyers.

Responding to social disruption

Another dynamic to consider is how to mitigate social disruption.

There is already evidence that the COVID-19 pandemic has rekindled divisions within society–black and ethnic minorities are disproportionately affected by the virus, while the poorest have been hit hardest by the financial costs of lockdown policies.

While not being ostensibly linked to coronavirus, the traction gained by the Black Lives Matter movement in the U.S. has undoubtedly been heightened in the pandemic’s context.

It has also prompted major shifts in consumer and business circles: Citizens and enterprises are putting time and capital towards prioritizing diversity and inclusion.

“Supplier diversity initiatives are no exception,” states supply chain software provider GEP in its 2021 Outlook. “In 2021, procurement and supply chain leaders will need to do more–by developing new approaches to include minority-owned businesses to achieve real targets for supplier diversity.”

Indeed, hardwiring diversity and inclusion into the procure-to-pay process will help organizations respond to the social unrest of 2020. This will involve tracking and benchmarking metrics at a transactional level, and companies can start by focusing on direct spending with small and diverse suppliers.

Going back to Deloitte’s advice on thinking beyond your four walls, businesses should also monitor the revenue growth of their suppliers in order to fully assess the impact of their supplier diversity and inclusion strategies.