By David Berse, Managing Director based in NY
As a result of regulatory requirements demanding additional capital against credit, investors are beginning to pull back on credit and become more discerning with assets, their balance sheets, and where they participate with agent banks. This has become a problem for any banks looking to originate transactions in the programs they run. When investors lose their risk appetite, they can drop out of backing a program, putting the agent in a tough spot with the clients they’re committed to.
So what do you do to ensure you can continue to maintain the credit commitments to your clients? In this article, we’ll cover two different approaches to protecting your program as a bank: automation and multiple funders.
Digitize Your Process for Efficiency and Transparency
Automation isn’t necessarily new to the trade finance space, but it is still rather underutilized. There is a lot of untapped potential in this technology, especially when it is transformed by digitization. For banks looking to fortify their corporate funding capabilities, that potential takes shape in facilitating the movement of invoices down to investors. LiquidX has created the tech to deliver that solution.
The traditional invoicing process consists of numerous spreadsheets, excessive email tracking, and a very long paper trail. LiquidX technology streamlines every aspect of the process by collecting all of this disparate data into a single digital platform.
Our users can send invoices down to investors based on a variety of filters, including: size, limit, currency, jurisdiction, and more. The platform can calculate what can be sold based on the bank’s balance sheet and investor appetite. A customized, automated set of rules will drive the invoices you want to investors while being tracked via robust reporting. Invoice management becomes simplified as you keep track of invoice status on the platform, rather than via a mass of emails.
The entire lifecycle of the transaction is managed on the LiquidX platform with automated technology, enabling transparency and forecasting. Not only does this benefit you and your clients, but it also provides investors with greater risk management solutions, preventing inaccurate reporting and saving on reconciliation.
Deepen Your Pool of Investors
The threat of having an investor pull the rug out from under you due to credit or risk is incredibly present in today’s market. High interest rates and a looming recession have contributed to investor caution and wariness. A solution to avoiding that kind of disaster is by broadening your investor pool.
With LiquidX, banks immediately expand funding opportunities to over 60 different investors within our funder network. This increases the options to sell down invoices to multiple investors that have the ability to target specific criteria or industries with difficult tenders or credit profiles. This level of flexibility allows banks to improve funder risk management and make space for more deals that they may not have had the capacity or capability to win before. Customers can cast a wider net among corporates as well, knowing that they have access to a deeper pool of liquidity supporting them.
Partnering with the Right Tech Provider
LiquidX’s solutions are designed to enable you to do business better with the power of digitization behind you. Our technology utilizes automation to take the manual, time-consuming tasks, like sorting through spreadsheets, of your table and allow you to focus on higher value strategizing.
Managing your invoices and liquidity on a single platform not only streamlines your process, but it can also foster more transparent communication between you, your investors, and your corporates – especially if all parties are on the platform.
To learn more about our industry-leading, end-to-end digitization using the latest and most advanced tech available today, request a demo or contact us directly.