Known for its strategic location and robust infrastructure, The Netherlands has long been recognized as a pivotal player in global trade. One of the largest exporters of agricultural products globally, the country’s efficient agricultural supply chain and innovation in food technology have enabled it as a key exporter of flowers, vegetables, dairy products, and meat. It is also a major player in the chemical, pharmaceutical and industrial machinery sectors. A significant exporter of refined petroleum products, the country is also investing in renewable energy technologies, making it a key player in the future energy landscape.
Home to the Port of Rotterdam – the largest in Europe and gateway to the continent, the Netherlands is a global leader in logistics and transportation services with a highly open and export-oriented economy that supports many of Europe’s largest companies. A favorable tax regime and a multilingual workforce also make it an ideal hub for international trade and an attractive location for shared service centers (SSCs).
Despite this prestigious heritage, much of Dutch trade just like in other markets, still relies on trade finance to support its cross-border transactions. * Whether documentary trade finance – a bank guarantee (which promises to pay should the corporate fall short of its payment obligation), a letter of credit (which guarantees the exporter will receive payment provided the conditions are met) a documentary collection (where the bank acts as an intermediary but does not guarantee payment) – or receivables finance (which help businesses improve cash flow by selling invoices to third parties, enabling quicker access to funds) – Dutch companies are supported by strong trade and supply chain finance. With trade constituting around 30% of the Netherlands’ Gross Domestic Product (GDP), this financial support is crucial to optimize liquidity, secure international trade payments to protect both buyers and sellers and to build supply chain resilience.
However, much of this trade finance has historically been reserved for the 1% of large multinational companies who have long-standing custom and credit history with the leading local and European trade banks. In 2022, the trade finance gap reached a record USD 2.5 trillion, marking a 47% increase from USD 1.7 trillion in 2020* indicative of the many smaller companies not being able to access funding to support their trade activity.
Fortunately, with the rise of digital trade finance processing, change is possible, as more and more banks can improve their efficiency to provide more diverse lending and support small-to-medium enterprises (SMEs). The cost and operational benefits of SSCs coupled with the use of a collaborative platform like Surecomp’s RIVO™ can centralize communication, credit assessments, risk management and document handling, to ensure that trade finance transactions are processed more efficiently and in compliance with international regulations.
This operational transformation is an opportunity for growth and why digital trade finance should be prioritized by every ecosystem participant, the fintechs, financiers, large multinationals and SMEs alike.
Why should digital Trade Finance be top of mind?
Traditional trade finance processes, often paper-based and time-consuming, are inefficient and prone to error. In the age of digital transformation, trade finance platforms like RIVO™ enable faster processing of transactions by automating manual tasks and reducing the reliance on paper documents. This leads to quicker turnaround times, allowing businesses to capitalize on trade opportunities more effectively.
The trade finance regulatory landscape is complex and constantly evolving. Digital solutions help businesses stay compliant with international trade regulations by providing automated checks and ensuring that all documentation meets the required standards.
Leveraging advanced artificial intelligence (AI) technology to enhance automation, security and transparency, digital solutions create immutable transaction records, reducing the risk of fraud and improving trust among trading partners. They reduce operational costs by minimizing errors, reducing the need for physical storage, and lowering the cost of compliance with regulatory requirements. Particularly important in today’s volatile global market where risks can arise quickly and unexpectedly, digital platforms also provide real-time data analytics, allowing businesses to better assess and manage the risks associated with trade finance.
For large Dutch multinationals, embracing digital trade finance means staying competitive and efficient in a rapidly changing market. For the SMEs, it offers the flexibility to scale operations without the need for significant investment. It opens new opportunities to expand and grow that may have previously been out of reach.
“It’s an exciting time for companies in this progressive market,” says Wim Kok, a renowned international trade expert and Surecomp ambassador. “We see an appetite to drive growth and innovation after the post-pandemic disruption and I am confident we will see SME digital adoption expand, following support from the banks and MNCs who are keen to accelerate trade finance processing and remain at the forefront of global trade.”
The future of trade finance is digital, and for Dutch companies of every size, this evolution presents an exciting opportunity to enhance global presence and operational efficiency.
*The World Trade Organization (WTO) estimates that 80-90% of global trade relies on trade finance.
* https://www.futureoftrade.com/global-trade-and-finance-gaps
To find out more about how digital trade finance can bring new opportunity for growth, join our webinar on October 9th, 10:30 CET
