Ecommerce platform Tradeshift has announced it is working with Raindew Trade, an Africa-focused supply chain finance provider, to provide working capital to firms struggling with the disruption caused by Covid-19.
Denmark-headquartered Tradeshift says the US$1.5bn Instant Supplier Payment Scheme will be available to businesses in South Africa and other selected markets on the continent.
The scheme, which operates on the Tradeshift platform, lets suppliers request early or upfront payment within 48 hours of invoice approval, while corporate buyers can benefit from extended payment terms of between 30 and 360 days.
GTR understands the two firms are planning to start facilitating supplier payments as early as July 8, following a one-month customer onboarding drive.
Covid-19 has already had a profound effect on the wider supply chain finance market, with providers reporting a spike in demand in the first half of the year. At the same time, containment measures such as nationwide lockdowns have also accelerated efforts to digitise trade.
In the case of the African market, the two firms say suppliers are currently facing “severe liquidity and cashflow pressure”.
A joint Tradeshift and Raindew Trade presentation seen by GTR states that small businesses – which make up 98% of companies across the continent – are facing major disruption as a result of the pandemic and associated containment measures.
Most businesses have less than a month’s worth of cash-on-hand, it adds, and reports that some suppliers have suffered defaults on payment for goods that had already been delivered. In other cases, suppliers are demanding upfront or early payments “to stay afloat”.
“Supply chain disruptions, including Covid-19, have forced companies to embrace digital transformation of supply chains and business processes,” says Dan Quinn, Tradeshift’s general manager for the Middle East and Africa regions.
“Business leaders across the region are quickly realising they can no longer delay digitising core operating infrastructure that is essential to business continuity.”
Allan Musona, founder and executive director of Raindew Trade, says those trends are not expected to be short-term.
“The demand and availability of liquidity and digital tools to advance global trade is something which will endure going forward, with benefits for those providing capital and technology as well as those receiving it,” he says.
There are no costs to buyers or suppliers for enrolling in the platform. Buyers are expected to confirm the validity of invoices submitted by suppliers, and must issue irrevocable payment undertakings to fulfil those invoices on time.
Tradeshift says the scheme is similar to a US$55bn instant supplier payment programme unveiled in May this year, which was developed with the support of Danish export credit agency EKF, though that programme targets large organisations based in Denmark.
July 3, 2020