August 7, 2024
We receive this question 3-5 times per day. It is an excellent question that we now answer with high conviction.
Here is how we think about trade credit:
- Vast market potential: Trade credit is a substantial part of the $9 trillion trade finance market. Trade credit is present in 60% of ALL b2b sales and much higher (85-90%) in industries like manufacturing.
- A fractured system: Small and medium-sized businesses need financing, but they cannot obtain it due to poor data, tedious underwriting workflows, and biased decision-making. This contributes to the $2.5 trillion financing gap for small and medium-sized businesses.
- Opportunity: Trade credit should be the most efficient commercial lending market given the aligned incentives of suppliers and buyers, as well as the direct exchange of goods for funds. Bank loans and credit cards do not have the same alignment.
- Ripe for disruption: There is one major incumbent that most companies want to replace. A handful of startups see this opportunity. The size of the prize is so large that multiple winners will survive.
- Companies embracing change: We have found many tech-forward credit leaders at so many companies, and they have become incredible partners.
We are leaning in: We see a larger shift where credit teams embrace automation and advanced analytics. With these tools, they can deliver a much better experience for their customers (much faster onboarding) and a healthier overall business (less bad debt).
