What is Trade Finance and what does TAEFL do?
TF is financing trade, whether it be UK to UK buyer, UK to overseas buyer or overseas supplier to UK buyer. What we do as a company is look at the best solution for the Client which could be funding its orders or using other appropriate forms of funding.
How has Trade Finance changed since 2008 when TAEFL started?
Trade Finance has become more prevalent in recent times, but with it comes some challenges which are easy to overcome if you know what to do. We have much to think about over the next 2 years following the Brexit vote.
We’ve seen problems in Syria, Iraq and Iran – although Iran is now seen to be more acceptable. We’ve seen countries fail and have problems such as Russia. We’ve seen problems in Brazil and in other parts of South America. But at the end of the day trade is there to be done, if it is with creditworthy parties that can either deal with letters of credit or be credit insured.
What are the short to medium term plans at TAEFL?
We see ourselves growing over the next 3 years, doubling in size and becoming one of the leading trade finance houses to support SMES for the next decade. We’re looking at growth, we’re looking at providing support and helping our clients to move along their own financial journey. As their balance sheet improves, different forms of financing will become available and no doubt this will lead to greater growth.
You recently launched the Tooling Fund. What is it and how does it help your customers access Trade Finance?
The tooling fund is open to all manufacturers throughout the UK, but specifically aimed at the Automotive industry. By providing this £1M tooling fund, we hope to bridge the finance gap between the expense of designing and producing a tool, to using the tool to produce goods which ultimately leads to payment from the buyer. This means manufacturers do not have to turn down orders due to cash restraints, but rather complete bigger orders and increase their reputation in the marketplace.
What’s your opinion on “Blockchain” and Trade Finance, given Barclay’s recent transaction in partnership with Wave?
I’m very sceptical about blockchain – I’m probably old fashioned! I don’t think it will work for the typical SME, but we have seen paperless trading in the commodity sector for multibillion turnover companies and we’ve also seen paperless Bills of Lading etc. I don’t see why that should change and Bolero was the driving force behind that. For SMEs, I question if there is a desire to bring all the different parties into the transaction together. So although it is a nice idea, I must admit to being sceptical.
Do you think Trade Finance will be a paperless proposition in the foreseeable future?
Trade Finance is paperless now, but only for the multinationals as I’ve said. I don’t think the cost incurred by SMEs to set up a paperless function will be more than offset by the benefits to be gleaned and we have to realise that 80% of world trade is conducted by 20% of the corporates. I believe that it will be the 20% who will be handling that type of business, not the 80% who are handling a small amount of international trade.