3Rings Capital

Happy New Month! 🤗

It's that time of the year to reflect on Life's journey from January till date.

We hope you have been able to meet your goals and if not, November is a month of giving. Give yourself a chance to achieve your goals before the end of 2022.

We are rooting for you ❤️

The trade finance option you choose is not a strategy in and of itself. To succeed, you must set your strategy and prioritize your goals for payment terms, supply chain health, and return on investment. Once you have a strategy, then find the right “working capital mix” of trade finance that supports your goals and the full spectrum of your supply chain.For example, supply chain finance doesn’t provide value for
you as a return. The value is in terms standardization or terms extension and support for your largest suppliers.

Best practices to consider as you develop your strategy:

• Prioritize the liquidity of suppliers.
• Use banks to build cash, while using the balance sheet as much as possible to boost margins.
• Consider a mix of trade finance solutions to fit needsacross the full spectrum of your supply chain.
• Limit your reliance on a bank or single entity for youroverall strategy.
• Speeding up payments, whether on the receivables orpayables side, always improves margins.
• Shareholders always value margins and EBITDA overworking capital.
• You must protect your business and your supply chainregardless of what is happening in the market.
• Suppliers often need a trade finance option but may beconcerned about protecting their revenue stream and notbe forthcoming about liquidity issues.

Trade finance offers a return on
low-risk investment and protection for supply chain. Not all trade finance options are equal. And not all are a fit foryour company’s unique needs. However, there are a few best
practices for trade finance that are universal.

Trade finance helps multinationals put cash to work in eachgeography rather than remain “trapped.” It also supports yoursupply chain and helps you respond to increasing fulfillmentpressures.

KEY TRENDS IN TRADE FINANCE:

• No-risk, you are receiving a discount on money you already guaranteed to pay your suppliers
• Global, puts cash trapped on a balance sheet to work in each geography
• Improved margins, adds value to an asset earning little in interest with little effort

ACCOUNT PAYABLE

Many organizations focus strategy on managing operating expenses. However, accounts payable offers the best opportunity for your bottom line. For Account Payable that value lies in both process improvements and leveraging trade finance.
Regarding savings and efficiencies, automating the AP process allows companies to reduce the bottleneck from reliance on paper documentation, and to shorten invoice
cycle times.

Account Payable automation requires not only investment, but significant process change for both you and your suppliers. A common misconception is that your AP process should be automated before you consider trade finance. This approach leaves value on the table.

UNLOCKING VALUE FROM ACCOUNT PAYABLE

• AP automation standardizes your process, reduces themanual effort required to process invoices, and providesgreater visibility of payables.
• Launched first, a trade finance solution that offers earlypayment for discounts, increases your margin, and helps fundAP process improvement.
• With both programs in place, there is an increased window ofopportunity for value from discounting.

Efforts to digitise trade have been going on for more than 10 years, with innovations such as BPO, and even early platforms such as Bolero. But they have gained little traction – as there is a vast number of participants in the trade ecosystem that lack the scale or sophistication to use these platforms, they fail to build the scale required for such network-based products. Recently, the ongoing shift to open account trade, coupled with increased appetite for digitisation and bank / investor ‘hype’ from technologies such as blockchain, has driven a new generation of innovation, with multiple digital ecosystems appearing over recent years. These ecosystems are often the products of consortia of cross- industry partners or sponsors collaborating to establish digital platforms that connect entities within the broader trade finance network and facilitate the flow of data between them. They typically aim to provide:

1. Harmonisation – the ability for most parties involved in a transaction to interact via a single platform

2. Efficiency – the automation and simplification of processes, including real-time data exchange, reducing costs for participants

3. Transparency – the secure sharing of data directly between the relevant parties

4. Security – the ability to authenticate parties and record transactions to reduce the chance of against fraud, with or without DLT
Many transactions using such technology have been announced recently. But they have typically been no more than test transactions, involving clients such as Cargill, Rio Tinto, wool exporter Fox & Lillie, and China’s state-owned Sinochem Energy Technology. They do not represent a systemic move to the new platforms for business-as-usual. Nor is there any “single winner”. Many platforms now compete, variously focused on specific regions, on kinds of goods, or on legal arrangements (such as documentary vs. open account trade).

Source - Trade Finance Global

Structured Commodity Finance or SCF is a type of lending used within the commodities world; where a simple and straight forward bilateral lend will not work. In order to make many commodities based transactions work; we need to look at the wider trading cycles, products, buyers, sellers, insurance and time periods of trades.
https://www.tradefinanceglobal.com/finance-products/structured-commodity-finance/

Closing Africa’s $100 billion trade finance gap is going to require alignment across a number of ecosystem elements, especially given current geo-political instability and supply chain issues.
https://www.tradefinanceglobal.com/posts/african-trade-finance-enters-an-exciting-new-phase/

Digitisation allows corporates to achieve better control of their credit facilities, reduce fees and speed up the application process, enabling transaction volume growth.
https://www.treasurers.org/hub/treasurer-magazine/how-digital-trade-finance-making-it-easier-exchange

In some countries, mineral resources represent a huge source of income and wealth. But resource abundance does not always bring sustained economic growth and developmen, it can have the opposite effect, which is sometimes referred to as the “resource curse”. Countries that are heavily reliant on their mineral wealth often have weaker institutions, spend less on education and are more corrupt.
https://www.oecd.org/trade/topics/trade-in-raw-materials/

Happy Independence Day Nigeria and Happy New Month everyone one 😍🤗😍🤗😍🤗

The continent has the highest rate of female entrepreneurs globally with approximately 26% of female adults involved in entrepreneurial activity contributing between U.S.$250 and U.S.$300 billion to African economic growth in 2016, equivalent to about 13% of the continent's GDP,
https://allafrica.com/view/group/main/main/id/00083431.html

Nigeria lost roughly US$1bn in export revenue to crude theft in the first quarter of the year, officials say, as criminal networks work to capitalise on soaring energy prices in the wake of the Ukraine crisis.
https://www.gtreview.com/news/africa/nigerian-oil-export-revenues-hit-by-us1bn-surge-in-theft/

Investment into digitisation has been happening for the past two decades, but “what we’re seeing now is the use of applications towards consumers and that’s where lower- and middle-income markets are seeing the growth of interest.
https://www.bii.co.uk/en/news-insight/insight/articles/accelerating-digital-transformation-for-sustainable-economic-development/?fl=true