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Tradeshift enables $55 billion Danish COVID-19 trade finance programme

Supply chain payments FinTech Tradeshift is working with the Danish Export Credit Agency (EKF) to open up liquidity for large trade organisations with a technology-driven supply chain financing model.

The model will encourage Danish banks to offer favourable credit lines to organisations with export turnover in order to pay their suppliers earlier, and Tradeshift claims that up to $55 billion in working capital can be made available to suppliers between June 2020 and June 2021.

Mikkel Hippe Brun, Co-Founder and SVP, APAC at Tradeshift, commented: “The immediate payment scheme has the potential to become a vital support package for companies during the corona crisis. Not only is the economic potential inherent in itself, it also avoids the behavioural death spiral, where all companies in a value chain withdraw their payments simultaneously.”

The initiative comes as a response to a slowdown in trade since the beginning of the COVID-19 crisis, and according to research by Sidetrade, unpaid B2B invoices has increased by 23 per cent in the UK since the start of the lockdown.

Furthermore, an estimated $9 trillion dollars of working capital is currently trapped in supply chains globally, due to the lack of suitable supply chain financing options.

Kirstine Damkjæ, Director of EKF, which will underwrite the lines of credit, said: “We want to do our bit to motivate companies to pay immediately, so we’ve made our full arsenal of solutions available to export companies that choose to show their support for suppliers. Under our model companies can pay suppliers ahead of time without compromising their own liquidity.”

The partnership is targeting the top 250 large buyers in Denmark and noted that it will be a cost-efficient alternative to government-backed loans and stimulus packages currently available.

Moreover, Tradeshift has made the model open source to allow other FinTechs and organisations to allow the solution to be rolled out in other countries.

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