International trade and associated services have been dominated by banks for years. Yet recent changes in this industry have made it ripe for disruptors and innovators aiming to capitalise on the inefficiencies of current systems and practices. We examined some interesting start-ups and early stage businesses innovating in this space:
Fluent have developed a cloud based network that enables real time, low cost, simple and secure invoicing and payments. They are redesigning the way business transactions occur by incorporating bitcoin and blockchain technology into the corporate industry. Bitcoin is a fast growing digital currency that provides instant payments online, rather than through banks or other intermediaries. Blockchain acts as a ledger that manages and facilitates bitcoin transactions over the cloud, adding useability and security to the digital currency. Incorporating this technology into their platform allows Fluent to offer a service that increases efficiency, provides flexibility and enhances collaboration in B2B payments across global supply chains.
Octet is providing small businesses the power to trade with established suppliers by providing them with an additional line of credit. The inability for new businesses to obtain extensive funding from lenders when making purchases have meant that they lack the negotiating power to secure the best price. Octet is one of the few companies that are willing to trust small business by focusing on when a business has the ability to meet their obligations, rather then when they can’t. By focusing on prevention, rather than a cure, Octet are able to equip start-ups with the money and power they need to trade internationally.
An early pioneer of the Australian fintech space, OFX have recently expanded its Services as a Software (SaaS) offering by streamlining the way international payments are received in domestic bank accounts. Previously, payments made internationally had to go through various vendors before reaching a domestic bank account. Jeff Parker (Chief Enterprise Officer at OFX) believes that merchants who are able use OFX and receive funds directly into their domestic accounts can save up to 60% in exchange rate costs. OFX has also incorporated an application program interface (API) which significantly reduces the amount of time it takes companies to incorporate this software into their daily transactions.
Developed by industry people for industry people, CargoHound aims to increase the efficiency and profitability of a business’s global supply chain. This start-up has effectively managed to build an online marketplace the connects international importers and exporters with reliable freight companies. Its success has largely been based on the cultivation of a community marketplace where users rate and review freight companies, ensuring that importers and exporters can quickly identify the freighter that best suits their requirements. This has allowed CargoHound to significantly reduce the time, cost and risk for SMEs who operate internationally.
TradeShift was developed and launched by three Danish entrepreneurs with aim of redesigning the way payments are made between buyers and sellers. Generally, buyers pay suppliers 30, 60 or 90 days after the purchase of a commodity. TradeShift found that these late payments are so common that a third of all companies believe it is ‘a fact of business life.’ But late payments can be a significant concern to SME’s who are often exposed to financial risk through currency fluctuations, or experience cash flow shortages. Their co-founder, Christian Lanng, claims that more than $US2 trillion is locked up in late payments which is hurting both buyers and suppliers. In response to this, TradeShift has developed a cloud based software that allows sellers to offer incentives to buyers in exchange for earlier payments. TradeShift is having a notable impact on the international trade industry with over 800,000 companies in 190 countries depending on their platform.
E-commerce giant Alibaba is beginning to turn its attention to the international marketplace by expanding out of China. The company is currently the largest retailer in the world and accounts for 60 percent of all online sales in China. Earlier this year, Alibaba announced that it will establish offices in Australia and focus on improving the access Australians have to the Chinese retailer. This will allow Australian businesses to tap into a lucrative marketplace as Alibaba makes it easier too communicate with Chinese vendors and source supplies and products from Asia.
This expansion is only a small part of Alibaba’s global strategy and has taken them one step closer to their primary goal of entering the US market. Recently, their Founder Jack Ma proposed the creation of an international online sales platform for SME’s. Ma stated that 80% of companies are not participating in the global economy, and a World Trade Platform would change that by reducing the geographic and national barriers currently encountered by global businesses.
Elemica specialises in providing companies with a system to manage their supply chain network, that has a particular focus on the communication of data. Elemica believe that slow data communication between international trading partners is negatively impacting the ability of companies to respond to real time market events. For companies to prosper, they need access to a robust network that produces and transforms complex data into meaningful, profitable information. Elemica successfully provides this network to a variety of multinational companies and ensures that international trade is not hindered by transactional barriers or a lack of information flow.
Foreign Exposure (FX) is a growing concern for companies operating internationally as exchange rates continue to fluctuate. A clear example of this is the volatility of the British Pound in the wake of Brexit which left many companies disadvantaged because of slow, inefficient FX management. Kantox are attempting to reduce this international trade barrier by helping companies manage their currency exposure, build hedging strategies, automate FX transactions and process international payments. It achieves this by offering a smart and efficient API that works with a companies’ in-house ERP system or TMS. Kantox’s successful API launch has seen their 2000 clients process over $100 million in just six months, enabling companies to trade internationally with less risk and more confidence.
Similar to TradeShift, ezyCollect deals with the management of accounts receivables between trade partners. ezyCollect focuses on the administrative side of payments for SMEs and provides an automated way of managing a companies’ receivables. They improve the way companies communicate with debtors by automating manual tasks such as sending emails, postal letters, managing disputes, tracking conversations and promises, and escalating bad debts to third party debt collectors. One-click integration with popular accounting software like MYOB and Xerox have enabled ezyCollect to improve the way thousands of companies’ trade worldwide.