by Sue Hinton | Jul 27, 2021 | Blog Posts
NEW YORK, NY – July 27, 2021 – LiquidX, the global fintech solutions provider for working capital, trade finance, and insurance, today announced the appointment of Keith Raymond as Managing Director, InBlock Sales. Mr. Raymond will lead the commercial expansion of LiquidX’s ground-breaking InBlock digital working capital platform. The cloud-based InBlock platform uses leading technology to automate and optimize working capital management, providing CFOs with the opportunity to reduce the cost of their accounts receivable and accounts payable, improve the cash conversion cycle, and reduce fraud risk.
Mr. Raymond has over 15 years of experience managing functions, processes, and teams within numerous software vendors in the Corporate Finance and Treasury space, with roles ranging from sales management, sales and marketing strategy, account management, and product management. In addition to his sales experience, he also established and managed corporate Treasury, Accounts, Accounts Payable and Accounts Receivable departments.
“InBlock helps corporates leap ahead in their digital journeys to work faster, smarter, and cheaper. We are excited to have Keith leverage his expertise in this space to scale the only end-to-end working capital solution on the market,” said Jim Toffey, CEO of LiquidX.
“We are thrilled to welcome Keith to our growing team,” said Ali Hackett, Chief Revenue Officer of LiquidX. “Keith’s history of success selling SaaS software subscriptions and consulting services to global corporates and financial institutions will greatly contribute to the expansion of InBlock.”
InBlock is the only working capital platform that connects the inventory, purchase order, and invoicing for buyers and suppliers using distributed ledger technology (DLT) to link the digital records for operational management, monetization, and insurance.
About LiquidX
LiquidX is a leading global technology company that enables finance professionals to transact faster, smarter, and cheaper by digitizing and automating their trade finance and working capital management. Headquartered in New York with offices in Boston, London, and Singapore, LiquidX delivers the industry-leading ecosystem for working capital optimization to its diverse network of global participants including corporations, banks, institutional investors, and insurance providers. LiquidX incorporates blockchain technology and machine learning analytics to greatly enhance transparency, reporting, and forecasting for financial professionals. To learn more about our next-generation solutions please visit liquidx.com.
by Sue Hinton | Jul 8, 2021 | Blog Posts
NEW YORK, NY – July 8, 2021 – LiquidX, the global fintech solutions provider for working capital, trade finance, and insurance, today announced that Kristen Michaud will lead its InBlock business and join the Senior Management Team. Ms. Michaud, a thought leader and innovator in Corporate Treasury with over 20 years of experience in Treasury, Payments, and Financial Systems, has been leading the development of InBlock since she joined LiquidX. The cloud-based InBlock solution employs Artificial Intelligence and Distributed Ledger Technology to optimize working capital management for corporates, banks, and insurers.
“Kristen has taken everything she wished would make her life better in her prior corporate roles and put it into InBlock. Her knowledge and leadership, combined with our next-generation technology, has produced a truly market-disrupting product,” said Jim Toffey, CEO of LiquidX. “As LiquidX continues its phenomenal growth path, we will benefit from Kristen’s talents on our leadership team.”
“I am thrilled to take on broader responsibility across InBlock and join the Senior Management Team. InBlock brings the only technology solution to corporates, banks, and insurers that can truly transform their working capital processes,” said Kristen Michaud, Head of InBlock.
Ms. Michaud has over 20 years of experience in Treasury, Payments, and Financial Systems, most recently at General Electric (GE) where she was responsible for Global Cash Operations including cash infrastructure, controls, and digital transformation. She has delivered large scale transformation efforts for GE including establishing the Treasury digital strategy, payment transformation, and establishing Treasury capabilities in the shared service centers. Prior to GE, Ms. Michaud worked at International Business Machines (IBM) where she held leadership roles in Global Financial Systems, Treasury, and Business Consulting. She is a frequent speaker on the topics of payments, cash management, working capital, blockchain, and digital transformation.
InBlock is a LiquidX product that ingests, digitizes, and automates the management of purchase orders, invoices, insurance policies, loans, or any other trade finance assets. InBlock enables digital connectivity to participants throughout the supply chain, including customers, vendors, finance providers, and insurers providing shared visibility by leveraging distributed ledger technology (DLT). “InBlocking” an invoice carries the benefits of verification, connected data, integrated APIs for updates, and a flexible, operational workflow that facilitates the management of the invoice through its lifecycle. Corporates benefit from the flexibility to monetize the digital invoice, while banks and insurers benefit from a digital asset carrying the history of origination and actions taken against it.
About LiquidX
LiquidX is a leading global technology company that enables finance professionals to transact faster, smarter, and cheaper by digitizing and automating their trade finance and working capital management. Headquartered in New York with offices in Boston, London, and Singapore, LiquidX delivers the industry-leading ecosystem for working capital optimization to its diverse network of global participants including corporations, banks, institutional investors, and insurance providers. LiquidX incorporates blockchain technology and machine learning analytics to greatly enhance transparency, reporting, and forecasting for financial professionals.
by Sue Hinton | Jun 29, 2021 | Blog Posts
New York, NY – June 29, 2021 – LiquidX, the global fintech solutions provider for working capital, trade finance, and insurance today announced that its Singapore entity, LiquidX Insurance Services (Singapore) Pte. Ltd. (LISS), has received approval from the Monetary Authority of Singapore (MAS) to offer insurance brokerage services in the country. Alex Bursak, Director and Regional Head of Insurance Asia Pacific at LiquidX, was named Director of the program.
LISS can now help banks, asset managers and funds, and corporates of all sizes in Singapore to access, automate, and streamline Trade Credit Insurance coverage via the LiquidX 360 platform. The digital platform serves the entire Trade Credit Insurance value chain for quoting, policy management, and risk monitoring. LiquidX 360 is the only solution that integrates Trade Credit Insurance with next-generation capabilities for buying, selling, and managing Accounts Receivable and other trade finance assets on the same platform.
The Trade Credit Insurance market is estimated to roughly double in size from 2021 to 2027, from $9 to 18 billion, due to its role of mitigating trade risk in uncertain economic environments. By 2025, LiquidX estimates that between 30% – 50% of Trade Credit Insurance will be originated, managed, and transacted online. The LiquidX 360 proprietary platform will fuel a significant portion of this online growth.
“The MAS license is a huge milestone for our business in Asia,” said Jim Toffey, CEO of LiquidX. “With a growing market for Trade Credit Insurance, carriers and brokers are looking to technology to scale their growth, cut expenses, and digitally connect with their partners and policyholders. In addition, funders and corporates that manage and finance working capital on our platform can now seamlessly integrate Trade Credit Insurance coverage. We are thrilled that our technology is making the whole trade ecosystem run more efficiently.”
“We are honored and excited to be registered as an insurance broker by MAS, which will allow us to strengthen our position as the global leader in digitizing the Trade Credit Insurance market. As a key trading and finance hub in Asia, Singapore will continue to be an accelerator for our best-in-class tech-focused LiquidX 360 platform,” said Alex Bursak, Director and Regional Head of Insurance Asia Pacific at LiquidX.
About LiquidX
LiquidX is a leading global technology company that enables finance professionals to transact faster, smarter, and cheaper by digitizing and automating their trade finance and working capital management. Headquartered in New York with offices in Boston, London, and Singapore, LiquidX delivers the industry-leading ecosystem for working capital optimization to its diverse network of global participants including corporations, banks, institutional investors, and insurance providers. LiquidX incorporates blockchain technology and machine learning analytics to greatly enhance transparency, reporting, and forecasting for financial professionals.
by Sue Hinton | Jun 1, 2021 | Blog Posts
Kristen Michaud, Managing Director of InBlock at LiquidX, was a guest speaker at a webinar on May 27, 2021, on the use of blockchain in supply chains. The webinar was hosted by the Boston Blockchain Association and additionally featured Leanne Kemp, CEO and Founder of Everledger, Anndy Lian, Author of “Blockchain Revolution 2030,” and moderator Andrea Frosinini from the Canadian Blockchain Supply Chain Association. Ms. Michaud shared her expertise in the application of blockchain from a banking and corporate perspective, to trace and confirm the validity of an asset such as an invoice. Ms. Kemp provided insight from her experience using blockchain and other technologies to provide full visibility into origination and authentication in the diamond and gemstone industry. Mr. Lian contributed wider market insights from his role as a consultant to governments on blockchain and cryptocurrency.
Key Value in Traceability
The key application of blockchain in supply chains is to provide traceability and tracking of two main layers: physical goods and their associated documentation. In the diamond industry, since diamonds are unique like snowflakes, it is possible to create digital twins of diamonds and place them on a blockchain. A focus area for governments is tracking of goods in their economies, such as confirming the origins of medical supplies and tracking vaccine expiration dates.
The other layer relates to the trade documents themselves, such as purchase orders, invoices, bills of lading, etc., which represent parts and inventory in the working capital process. These documents are key financial assets for a company and are often monetized via banks or other financial institutions for funding operations. There is a risk associated with ensuring that the document represents legitimate transactions and real underlying goods, which often reside in a warehouse controlled by a third party. Connecting all relevant parties through blockchain helps diminish risk, particularly fraud, and gives lenders and insurers a source of comfort. The value provided by blockchain traceability even has the potential for supporting new financial markets by transforming traditionally non-liquid assets such as purchase orders into liquid assets, putting them into a form that can be more readily bought and sold.
Benefits for ESG and the Circular Economy
The panelists noted that blockchain can play an important role in Environmental, Social and Governance (ESG) and Circular Economy initiatives toward sustainability, waste reduction, and ethical manufacturing. More and more consumers are asking, “where did this product come from?” and “where does it go when it leaves me?” Blockchain helps companies record their product journeys more accurately. An obvious application – conflict diamonds – is already being addressed by Everledger. Newer applications are appearing that support sustainability in infrastructure, such as stored energy such as batteries for electric vehicles.
On the financial side, several banks have launched programs to provide financial support or lower rates to companies that meet ESG criteria. Large corporates have likewise established programs to support their suppliers’ sustainability efforts. Blockchain can provide the visibility and validation needed for these endeavors. Looking farther out, one vision is to tokenize even elemental components such as water or the environment to bring traceability and responsibility into supply chains.
Challenges to Consider
All panelist agreed that blockchain is not a magic bullet, standalone solution. A “symphony of technologies” must come together for full visibility of supply chains. For example, in the case of diamonds, scanning and other forensic technologies are needed to create the digital twin of a diamond that resides on the blockchain. For financial documents, digitization is an enormous amount of work for banks and corporates, but the resulting traceability is worth the effort. Artificial intelligence and “big data” are necessary to integrate to make blockchains smarter and optimize their true value.
The panelists noted that one misconception about blockchain is the assumption it can track and authenticate anything. Organizations must have a clear reason to implement blockchain and strong standard operating procedures (SOP) to realize the value of blockchain. To use blockchain, according to Ms. Michaud, “you have to digitize and automate a process, and you don’t want to automate a bad process.” Much care must go into properly capturing the history of an asset, because it has ripple effects throughout the system. Ms. Michaud cited the practice of factoring, where a company sells invoices that are payable in the future to a lender to receive cash faster. The purchasing bank needs certainty that the invoice is legitimate and was not previously sold to another bank. This validation is even more important since the bank may sell the invoice in a secondary market, and a valid invoice is easier to sell. Connecting counterparties on a blockchain builds trust across a financial supply chain.
The situation is more difficult for physical goods. One challenge is originating the data necessary for tracing at the object level. For diamonds, this requires recording carbon footprints to distinguish between natural and synthetic diamonds. In manufacturing, LED-certified factories that can measure their output are still a rarity. Sophisticated data ingestion for tokenization needs to be further developed before it can be widely utilized at speeds necessary to support consumer-level applications.
Today blockchain is penetrating high value industries such as luxury goods and gemstones, or economies with a sophisticated manufacturing infrastructure such as Germany. For example, a fashion house might tokenize its designs and garments, with royalties to be paid over time. Clearly this level of authenticity is not yet feasible in other supply chains such as perishables or fast-moving consumer goods. But it could be developed as blockchain applications mature.
SOP for Blockchain
One obvious and necessary challenge for the nascent blockchain industry is interoperability between private and public blockchains. Multi-chain protocols must continue to be established. Further, more education is needed on the roles and capabilities of both private and public blockchains, including which duties happen off-chain. The panelist noted several misconceptions about public blockchains, for example assumptions that they lack security, and “everyone” could read or write on the ledger. Properly executed, public blockchains have layers of security and privacy granted through permissioning and authentication.
Even though it is early stage for blockchain, its benefit for optimizing both physical and financial supply chains is obvious, and practical applications have already emerged. As one panelist noted, “A sheet of paper and a promise to pay only go so far these days.”
by Sue Hinton | May 14, 2021 | Blog Posts
Neil R. Brown and Frances B. Lim of KKR were featured speakers at a LiquidX webinar May 12, 2021, to discuss their study, A New Era for Supply Chains. The webinar was moderated by James Yu, LiquidX Managing Director.
Supply chains are like electricity, according to Mr. Brown. Most people don’t think about electricity until they flip a switch and nothing happens. Covid “flipped the switch” to put the spotlight on supply chains but seismic shifts were already in motion long before. Supply chains became longer and more complex with the expansion of global trade. Various factors, including increasing geopolitical tensions, growing populism, and transnational threats, have been building for years. Corporations are realizing they need to shift from thinking strictly about supply chain efficiency to looking at all inputs impacting supply chains.
Changing nature of trade
Supply chains naturally shift and respond to changing trade dynamics. But what is different today is the changing nature of trade, according to Ms. Lim. She notes that in recent years the center of gravity has moved from West to East, with economic activity being driven by consumption as world income and maturity grew. The global trade basket also expanded to include services such as experiences and health care instead of solely consumer goods, altering trade balances between countries. Complex and widely-dispersed supply chains are vulnerable to impacts from a variety of non-commercial factors.
Three major themes
The complexity and uncertainty that investors, companies, and policymakers face today falls into three broad themes. First is the need for thinking to continue to evolve around supply chains. Simply “rearranging the deck chairs” will not be enough in a more digital and services-oriented economy, or with more geopolitical volatility ahead, according to Mr. Brown.
Merely moving from an efficiency model that is hyper focused on margins to a resiliency model with more cushion in the system is not sufficient. Companies have been reliant on globalization to drive down costs, but this strategy does not take volatility into account. This volatility has three main sources:
- Increased geopolitical competition, which goes beyond the US-China trade war and is focused on broad issues such as technology and energy.
- Increasing domestic populism and nationalism, which encourages more inward-looking government policies.
- Transnational threats such as climate change, natural disasters, and pandemics such as Covid-19.
Taken together, these inputs have the potential for broad economic impact and require global solutions that are difficult to bring about.
Second, companies must think less about the “chain” and more about “supply chain mesh.” Labor and goods still matter, but trade has become more data driven and services oriented. Each input has risks that must be considered. For instance, governments are more inclined to apply a national security lens to industrial policy and technology, leading to a rise in “data nationalism” around the world. At the same time, data is a critical currency of global business. Global policies and regulatory frameworks have not kept up with technology, becoming a growing of competition and concern.
Finally, the present situation presents opportunities for both companies and investors that incorporate mesh thinking into their investment and commercial strategies. Some examples include adopting Environmental, Social and Governance (ESG) measures to make supply chains more climate friendly and responsive to customers, embracing automation, and exploring opportunities such as regional data centers.
Data will be key
With companies contending with more non-commercial external shocks, data can provide the real-time visibility to protect both the business and supply chains against disruption. One lesson during the Covid-19 disruption was that companies often do not see beyond their Tier 1 suppliers. If all competitors are sourcing from the same vendors, a disruption is bound to happen. Companies need to identify critical points of failure across the business and take a “longer-term mindset” to think of all inputs in concert.
ESG considerations
ESG may seem like a buzzword today, but the principle of good governances has been guiding business plans for a long time. Being less wasteful is “good for the bottom line,” as Ms. Lim notes. Socially conscious behavior can be driven by consumers, shareholders, or companies, and can be a tremendous value driver for companies. For example, younger consumers, are more environmentally aware and tend to purchase fewer goods.
Businesses need consider this trend and the opportunities it provides. ESG behavior is being encouraged both on the “carrot” side, with tax and financing incentives, and on the “stick” side, with the expected development of ranking or scoring systems for corporate ESG behavior that will create competitive pressure for companies to change.
Supply chain strategies
The panelists noted several areas where companies are adapting their supply chains to decrease risk and increase efficiency.
- Trade regionalization – to add resiliency and shorten supply chains.
- Reshoring back to the US – to create additional balance.
- Adoption 3D printing – to shorten production and delivery times.
- Automation – to increase productivity levels.
Final takeaways
The panelists stressed that it is “no longer business as usual” regarding supply chain management. Supply chains are highly complex and there are no “silver bullet” solutions. Successful companies in a post-pandemic world will be those that act to build in resiliency and understand the interlocking inputs that comprise their supply chains. In doing so, these companies will bring focus to managing a broader set of non-commercial risks, avoid wasting time on severing chains that cannot be decoupled, invest in resilience even at the cost of some redundancy, and advocate for better policy safeguards.
by Todd Lynady | Apr 22, 2021 | Blog Posts
Economists often make a joke about how companies weather the cyclical nature of business, “When the tide goes out, we’ll see who’s swimming naked.” The Covid pandemic was more of a tsunami than a mere tide, shuttering or weakening scores of businesses. Many that survived are highly leveraged after grappling with a full year of disruption, which continues to this day.
The tenuous situation has ripple effects because companies that cannot pay their bills financially weaken their trading partners. Manufacturers and wholesalers selling on open account terms often turn to Trade Credit Insurance to protect against this risk of non-payment. However, during periods of elevated risk, the cost of Trade Credit Insurance increases while the willingness of insurers to provide coverage decreases.
Suppliers that still want the benefit of trading with companies where Trade Credit Insurance is not available have another risk-mitigation tool available to them, Receivable Put Contracts. While different in many ways than Trade Credit Insurance, Receivable Put Contracts can work alongside Trade Credit Insurance to protect the risk of a customer’s bankruptcy.
What is a Receivable Put Contract?
A Receivable Put Contract provides suppliers with the ability to “pre-sell” their unsecured trade claims to a third party in the event of the bankruptcy of a buyer. The contract can be customized according to tenor and contract amount to meet the supplier’s needs.
There are two types of Receivable Put Contracts. The most common is a Pre-Petition Contract, which is typically purchased after the Trade Credit Insurance provider has stopped providing or canceled coverage but before the buyer has filed for Chapter 11 bankruptcy. Pre-Petition contracts typically offer 100% coverage, however, some providers provide flexibility of lower coverage amounts in exchange for lower pricing.
A Post-Petition Contact provides protection on companies that have already filed Chapter 11 bankruptcy and are still in bankruptcy protection, presenting a higher risk of liquidation. Investors are already in place for these contracts at coverage of 70-80% on average.
Receivable Put Contracts are typically issued for publicly traded or large private companies with audited financials. Coverage can be found for all sectors including, transportation, hospitality, airlines, retail, and metals, to name a few.
It should be noted that any bona fide obligation can be covered by a Put, not only receivables. For example, Puts can be secured for inventory finance or supplier repurchase default coverage. For a Receivable Put contract to “buy the claim” the obligation due, i.e., amount owed to the vendor must be scheduled in the bankruptcy document.
How is a Receivable Put Contract Different from Trade Credit Insurance?
Here are the key differences between these two types of risk mitigation tools:
- Receivable Put contracts are loss-occurring, meaning that the contract must be in place at the date of the loss. Trade Credit Insurance is risk-attaching, meaning that the sale of the good or service must have occurred during the policy period regardless of the date of the loss.
- Receivable Put Contracts only protect against a buyer’s bankruptcy, while typical Trade Credit Insurance policies protect against both bankruptcy and protracted default (slow pay.)
- Receivable Put Contracts are usually more expensive than Trade Credit Insurance. As such, they are usually only used when Trade Credit Insurance is not available due to the buyer’s risk profile. Due to this increased risk, rates are generally around 1% per month for coverage with a minimum contract term of 3 to 6 months and as long as 12 months.
Who Offers Receivables Puts?
Puts are offered by major banks and asset managers, as well as hedge and credit funds.
What are the Benefits?
Using a Receivable Put Contract allows suppliers to safely continue selling goods to a riskier companies when traditional Trade Credit Insurance coverage is not available in order to continue supporting their customer base and maintain market share. The contract essentially gives the vendor the ability to sell their claim at a predetermined price and discount rate.
Find Out More
Receivable Put Contracts can be an integral part of a company’s credit risk mitigation strategy, alongside Trade Credit Insurance, for protecting receivables in today’s volatile economic environment. LiquidX offers Receivable Puts as part of our overall trade finance and working capital management offering. If you would like more information, please contact Todd Lynady, Global Head of Insurance Sales & Business Development at tlynady@liquidx.com or +1 (718) 866-8454.
