We are pleased to announce an expansion of our trade finance operations to India. This announcement comes after Harbor’s recent geographic expansion into Mexico in February and is part of the strategic roadmap to build Harbor’s global platform for SME’s.

“Harbor’s ecosystem is growing at an exponential rate. As we continue to expand into key markets, we are focused on providing innovative and comprehensive solutions for our user base” said Bryan Maloney, CEO at Harbor. “Our franchise partners have the origination capacity and understand best practices in their respective markets. This is the key to building our global platform.”

Harbor India is being launched through a franchise partnership with Blue Ocean, a Mumbai based asset manager and investment advisor focused on working capital and trade finance. The scope of Harbor’s offering in India will be receivables finance for the 63 million MSME sized businesses which represent 40 percent of all Indian export volume. India’s MSME segment represent 45 percent of industrial production and contributes around 30 percent to India’s GDP which is forecasted to be 8.4 trillion USD by 2030.

**About Harbor** Harbor is the engine through which SME's can access cost effective, user-friendly and efficient financing for trade. In addition to working capital, the HarborTrade platform offers automation tools to improve visibility and operational efficiency among trading partners.

Harbor also provides a platform for retail investors, DeFi protocols and other traditional market participants to support such funding activities.  With its unique blockchain based funding and distribution model, Harbor seeks to provide healthy risk-adjusted returns in support of ever-growing trade flows.

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Harbor’s offering in India is receivables finance and factoring for the 63 million MSME segment which represent 40 percent of all Indian export volume.

Harbor Launches in India, Expanding Market Coverage 

In the summer months, trade finance providers tend to see a rise in utilization from retailers and their vendors looking for a working capital boost for holiday season inventory. This year, amidst global supply chain disarray, uneasy retailers are looking to get an earlier start on procuring goods to stock shelves and warehouses.

Importers are up against all kinds of challenges this time around: container shortages, shifting consumer demand during a pandemic, labor shortages, crowded ports, increased freight costs and record-slow shipping speeds, to name a few.

Stores that carried about one-and-a-half months’ worth of stock before the pandemic had their inventories to sales ratio fall to just 1.1 by March, the lowest level since at least 1992, US Census Bureau data show (Financial Times).

To combat import bottlenecks, logistics companies report that holiday procurement activity is on average happening two months early this year.

“This holiday season it’s all about inventory,” said Mike Steup, CEO of snakebyte Group, a consumer electronics and video game accessories company with licensing agreements with Disney and Microsoft. “We expect to see gaming and toy products flying off the shelves, with many products sold out weeks before the holidays.”

With an extraordinarily high demand for consumer electronics this year, giftable products like snakebyte Group’s gaming chairs, Pebble Gear™ tablets for children and Honeycomb Aeronautical flight simulation are expected to see soaring sales.

Snakebyte can meet the seasonal spike in consumer demand in part because of their own supply chain finance program with global trade finance provider, Harbor. The electronics business, with operations in Germany, United States, United Kingdom and Hong Kong procures its products from China.

With Harbor’s program in place, the Chinese suppliers are paid at shipment and snakebyte is granted four months before a payment is due to Harbor, freeing up working capital which can be used to generate inventory and deliver to retailers, e-commerce and direct to consumers.

Although preparations are being made up and down supply chains to ready for holiday shopping, consumers can still expect to encounter empty shelves and out-of-stock messages from retailers.

“This year, last minute holiday shopping isn’t a great strategy,” said Steup.

It’s not projected that supply chains will get back on track until after the Chinese New Year in February 2022.


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Supply Chain Finance to Meet Holiday Inventory Demand

This year, amidst global supply chain disarray, uneasy retailers are looking to get an earlier start on procuring goods to stock shelves and warehouses.

Uptick in Supply Chain Finance to Meet Holiday Inventory Demands

The aftershocks of the Covid-19 pandemic continue to rattle global supply chains as retailers and manufacturers attempt to keep up with resurgent consumer demand, tying up vessel capacity worldwide. With transit time increasing by up to 60 days from China and other supplier markets, buyers are forced to hold inventory longer, impacting cash flow.

Only about 40% of cargo ships make an on-time arrival to port compared to 70% two years ago, according to Denmark-based Sea-Intelligence ApS, with the greatest delays occurring at the adjacent U.S. ports of Los Angeles and Long Beach.

The congestion is the result of businesses ramping up their inventory to meet growing buyer demand, causing a shortage in containers and long waits for vessels to reach shore and offload goods. Additionally, outbreaks of Covid-19 among workers on ships and at major ports are also slowing shipping speeds.

The shipping bottleneck is so bad, Home Depot contracting its own cargo ship in an attempt to get products to their shelves and meet soaring demand for home improvement, unexpectedly provoked by the pandemic.

## Shipping Delays and Working Capital
For buyers that buy on FOB basis, (or “Free on Board,” a shipping term indicating that the buyer takes ownership of the goods once the supplier ships the product) longer shipping times mean a longer period holding inventory, known as Days Inventory Outstanding (DIO).

DIO is an important component of the cash conversion cycle, a metric that conveys how many days it takes for a company to convert its investments in inventory and other resources into cash flows from sales. It’s a measure of how efficiently a business is using its working capital.
With shipping disruptions causing a longer DIO, the cash conversion cycle is lengthened and working capital is affected.

## Rising Shipping Costs
With a higher demand for containers and vessels, shipping and container freight rates are sky rocketing, adding unexpected costs to procurement and further eating away at working capital. Drewry Shipping reports the cost of transporting a 40-foot steel container of cargo has increased by up to 547% for some routes.

## Working Capital Solution
When chartering your own container ship is not an option, one solution businesses utilize to smooth out cash flow and mitigate disruption is a supply chain finance program. Harbor, a tech-powered trade finance provider, works with middle market buyers to improve working capital. Harbor pays suppliers at shipment and grants buyers up to 120 days credit, allowing for an opportunity to sell goods before a payment is due.

“Companies purchasing goods from overseas are now burdened by longer delivery times which puts a stress on working capital. Having capital tied up in in transit inventory disrupts the cash conversion of the business,” said Katie Newton, head of origination at Harbor.

In a time when supply chains have already been turned upside down by semiconductor and lumber shortages, rising raw material costs and worker shortages, shipping delays and rising shipping prices are only adding to the turmoil.

A supply chain finance program can help add working capital and stability for both the buyer and supplier.


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Shipping delays affect buyer working capital

With transit time increasing by up to 60 days from China and other supplier markets, Harbor's working capital program can mitigate disruption. 

Global Shipping Delays Affecting Buyer Working Capital

*Supply chain finance program allows a Mexico-based seafood importer and distributor to improve working capital.**

DELRAY BEACH, FLA. – Trade finance provider Harbor announced the closing of a syndicated supply chain finance program for a seafood processing facility and distributor in Quintana Roo, Mexico. The program is managed on the HarborTrade platform and is being funded by Harbor and Kampala Capital.

The company’s procurement activity is both domestic and international and includes a variety of species including octopus, fish, lobster, and sea cucumber; however an average transportation time of 45 days from foreign suppliers adversely affects the business’s cash conversion cycle. With Harbor’s supply chain finance program in place, suppliers are paid at shipment and the buyer enjoys extended payment terms, allowing them to process goods and get them to market.

“As we expand our presence in Mexico, we are pleased to structure this syndicated SCF program with Kampala, improving cash flow and accelerating the growth of our client’s business,” said Bryan Maloney, CEO, Harbor.

**About Harbor**

Harbor is a trade finance provider offering working capital solutions for businesses involved in cross border trade. Their programs include supply chain finance, receivables finance and inventory finance – end to end solutions covering the entire cash conversion cycle.

Harbor’s proprietary platform makes trade finance more streamlined and accessible for small and middle market businesses. In addition to working capital, the HarborTrade platform offers automation tools to improve visibility and operational efficiency among trading partners.

Harbor facilitates trade both domestically and internationally with offices and representatives in Miami, Los Angeles, New York, Hong Kong,  Germany, and Mumbai.

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Harbor's supply chain finance program allows a Mexico-based seafood importer and distributor to improve working capital.

Harbor Provides SCF Program to Mexican Seafood Processor

2020 was a record year for supply chain finance (SCF) as corporate buyers strived to bail out suppliers hit by the pandemic by providing earlier payments. Even as global trade dwindled by nearly 10 percent, as reported by the World Trade Organization, supply chain finance participation rose by 5.5 percent. Although there is no official source of supply chain finance data, bank earnings and supplier participation are a good indicator for trends in the bank and non-bank supply chain finance sector.

Supply chain finance, also known as reverse factoring, is a financing system used by the world’s largest corporations which optimizes cash flow for both buyer and supplier. In recent years, SCF has gained popularity among middle market businesses, typically defined in the United States as businesses under 500 employees, according to OECD. Several factors are influencing this uptick in middle market SCF programs worldwide.

## Digitalization and Attainability  
Banks have traditionally been reluctant to provide supply chain finance to middle market businesses due to costly and time-consuming buyer and supplier onboarding processes, including Know Your Customer (KYC) and Anti Money Laundering (AML) practices.

With the growth of fintech and digitalization, non-bank SCF providers have emerged that incorporate working capital, vendor management and accounts payable functionality. By eliminating paper transactions, assessing credit risk from transaction data and having visibility on all trades, these providers are able to offer SCF to a new business segment.

Harbor, a tech-enabled trade finance provider, focuses on bringing supply chain finance to middle market businesses that trade globally. Their SCF program provides tools that improve efficiency and accuracy for the procure-to-pay process.

“Historically large corporates were the only beneficiaries of tech-driven supply chain finance,” said Andy Suen, chief operating officer, Harbor. “It’s exciting to bring this powerful tool for working capital and administrative efficiencies to all businesses with goals for growth.”

## Lessons Learned from a Pandemic
Middle market businesses on both the supply side and demand side were adversely affected by supply chain disruptions due to Covid-19. Suppliers faced illness and quarantine causing a lack of labor to manufacture goods. For buyers, a sudden drop in consumer spending coupled with delays in shipments from suppliers caused businesses to suffer.

As the global economy recovers, businesses are taking steps to prevent future supply chain shocks. Buyers are bolstering their supply chains by expanding their supplier base, mitigating the risk of disruption in the unpredictable event of illness or natural disaster. Expanding the supplier base requires tools to maintain a healthy cash conversion cycle, specifically to optimize trade payables with new suppliers. SCF achieves this while supporting suppliers through accelerated payments.

## Maximizing Working Capital
Supply chain finance is an attractive option for middle market businesses because it boosts working capital and promotes growth without interrupting existing financing. Unlike other forms of financing, SCF is not debt; rather it is a trade payable for the buyer and an accelerated receivable for the supplier. This unique distinction makes SCF desirable for businesses that wish to maintain senior credit facilities like asset-based loans or revolvers.


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Supply Chain Finance on the Rise in Middle Market

2020 was a record year for supply chain finance (SCF) as corporate buyers strived to bail out suppliers hit by COVID by providing earlier payments. 

Supply Chain Finance on the Rise in the Middle Market

All businesses need working capital to fuel growth. When considering a supply chain finance program to improve liquidity, importers tend to raise the same questions. We thought we would share some insights on the topics that are on the minds of growth-conscious buyers.

## 1)  How long are my payment terms for a supply chain finance program with Harbor?

Harbor’s supply chain finance program provides up to 120 days credit to buyers. Under this arrangement, suppliers are paid upon the shipment of goods and the buyer is given an opportunity to improve their accounts payable days (DPO). This optimizes the cash conversion cycle (a measure of how long input is tied up in production and sales before it is converted into cash received).

Example: Harbor provided a supply chain finance facility for a wool importer and manufacturer in the U.S. The company primarily imports from the United Kingdom, Turkey and New Zealand and sells to Canada and Europe.

With the program in place, the buyer is able to procure goods on open account terms with its overseas suppliers, with net 120 day credit. Additional time to sell goods before payment is due to the supplier has led to improved cash flow, enabling the business to meet demand for their products and focus on customer acquisition and expansion to new markets.

## 2)  I already have bank financing in place; Can I utilize supply chain finance?

Yes. Harbor’s program does not interfere with existing financing arrangements and can work as a supplement to other types of funding such as bank lines of credit and asset-based loans. Unlike other lenders, Harbor does not require collateral. Instead, the facility size is determined by the credit profile of the buyer.

Example:  A popular U.S. brand of hardwood flooring was limited by their bank asset-based line of credit because of ineligible receivables and low inventory advance rates. Harbor was able to supplement their ABL financing with a supply chain finance program, allowing for additional liquidity to boost inventory.

## 3) Do you have to underwrite and approve my suppliers?

No. Our supply chain finance program only requires underwriting on you, the buyer. We request your company’s financial statements and promptly provide a credit limit. This limit can be used to pay suppliers of your choice after a simple and fast paperless onboarding. Suppliers are onboarded through a self-registration on the HarborTrade system, without signing any contracts. Supplier onboarding and due diligence is non-invasive.

Example: A large U.S. based distributor of fishing and sporting equipment has many suppliers, including four smaller suppliers in Vietnam and India. The buyer has a supply chain finance program in place with a bank, however the bank would not approve these smaller suppliers because carrying out KYC and AML protocols is labor-intensive and cost prohibitive. The buyer applied for a supply chain finance program with Harbor and was provided a credit limit within 48 hours. The remaining suppliers were onboarded the same week and both the buyer and supplier began benefiting from improved working capital.

## 4) Why Harbor and not another supply chain finance provider?

Harbor provides buyers with a more streamlined approach to vendor and procurement management. With the HarborTrade platform, buyers can initiate orders and track fulfilment and payments in one easy-to-use paperless system. HarborTrade allows for improved communication between buyer and supplier. Traditionally trade finance platforms and procurement technology were only available to large corporates, but Harbor brings these efficiencies to SMEs. Although we are tech-savvy, there’s always a dedicated account representative standing by to provide excellent customer service to our clients.

## 5) How much does it cost?
Of course buyers want to know Harbor’s fee structure. Harbor pays suppliers 100% of the invoice value upon shipment of goods. After a predetermined timeframe of 30, 60, 90 or 120 days, the buyer pays Harbor the invoice total plus a fee. Fees can also be absorbed by suppliers through an invoice discount or cost of goods reduction. The fee schedule is determined based on the credit worthiness of the buyer and volume being traded.

Contact us today to set up a demo of the HarborTrade platform and learn more about how Harbor can provide your business with additional working capital and administrative efficiencies through our supply chain finance program.


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All businesses need working capital to fuel growth. Here are some insights on the topics that are on the minds of growth-conscious buyers.

5 Frequently Asked Questions About Supply Chain Finance with Harbor

## What is Supply Chain Finance?

When businesses that trade – that is buy and sell goods – are looking to boost their working capital, they may consider a supply chain finance (SCF) program. Since SCF was traditionally only offered by banks to large corporates, not all SMEs are familiar with what this program is all about.

Supply chain finance providers vary in terms of their financing criteria, process, and capabilities. Let’s take a look at the product offering of Harbor, a technology-enabled provider of SCF to middle market businesses globally.

## A Working Capital Boost

Harbor’s supply chain finance program provides up to 120 days credit to buyers. Under this arrangement, suppliers are paid upon the shipment of goods and the buyer is given an opportunity to improve their accounts payable days (DPO). This optimizes the cash conversion cycle (a measure of how long input is tied up in production and sales before it is converted into cash received).

## Who benefits from Supply Chain Finance?

A SCF program is advantageous to both the buyer and the seller in a trade partnership. The buyer can purchase goods on open account terms, enabling the business to sell product before paying for the goods. Simultaneously, the supplier is paid upfront by the SCF provider, without any risk of nonpayment.

## Simplifying the Procure-to-Pay Process

In addition to enabling better cashflow, Harbor provides buyers with a streamlined approach to vendor and procurement management with the HarborTrade platform. With HarborTrade, buyers can initiate orders and track fulfilment and payments in one easy-to-use paperless system. The platform also allows for improved communication between buyer and supplier.

## Who qualifies for a SCF Program?

SCF providers have varying criteria for businesses to which they can provide a SCF program including annual revenue, industry, and geographic location. Harbor typically works with middle market businesses from nearly all industries, located in North America, select countries in Central and South America, Western Europe, Australia and select countries in Asia. Suppliers can be located in most countries worldwide.

Harbor’s SCF program only requires underwriting on the buyer. Harbor reviews the business’s financial statements and credit profile to provide a credit limit. This limit can be used to pay suppliers of choice after they are onboarded through a self-registration process on the HarborTrade system.

## What’s the first step?

Importers with a focus on growth that are looking to increase their working capital or have access to liquidity as needed should apply for a supply chain finance program. With Harbor, the process is clear and uncomplicated. The first step is to contact Harbor for an introductory phone to get to know the business. Next, the Harbor representative requests financial statements and additional information on the business. In less than a week, Harbor provides the importer with a credit limit which can be used to pay suppliers of their choice and provides access to the HarborTrade portal. [Get started](https://harbortrade.com/contact) today.

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Businesses that want to boost working capital may consider a supply chain finance program. Harbor’s SCF program provides up to 120 days credit to buyers. 

What is Supply Chain Finance?

The Regional Comprehensive Economic Partnership (RCEP) free trade agreement (FTA) was signed in November following nearly a decade of negotiations.

The FTA is arguably the largest in history, encompassing one-third of the world’s population and economic output. Its creation was aimed at reducing trade barriers between China, Japan, South Korea, Australia and New Zealand and the 10 ASEAN members.

Most politically significant it is the first-ever FTA to cover China, South Korea and Japan, with the Brookings Institution expecting it will add $500bn to global GDP by 2030.

It “signals that Asia keeps pushing ahead with trade liberalization even as other regions have become more skeptical,” said Fred Neumann, co-head of Asian economic research at HSBC.

Within 20 years, 90% of tariffs and restrictions between the countries will have been eliminated, with the removal of rules of origin provisions the most significant detail. This creates an incentive for members to source components more freely within their region, removing paperwork and hurdles such as long customs clearance times.

## On the Outside Looking In

Following the United States withdrawal from Trans-Pacific Partnership (TPP) negotiations in 2017, the country’s influence in world trade is diminished once again.

Myron Brilliant, head of international affairs at the U.S. Chamber of Commerce welcomed the deal but called for the U.S. to adopt a more “forward-looking, strategic effort” to maintain its economic presence in the region, or risk “being on the outside looking in.”

U.S. exporters will likely be put under the most pressure, with the most significant result expected to be cheaper goods produced in the RCEP zone.

It also be could be harder for U.S. and European companies to enter the regional supply chain, most notably for industrial goods as the deal incentivizes trade between member suppliers to the detriment of non-members.

“The integration and prioritization that will result could, in turn, reduce the growth of U.S. exports to the region, as countries will shift their trade to competitors of the U.S.,” said Tom Lee, data and policy analyst at the American Action Forum.

“U.S. exporters, workers, and farmers need access to these lucrative markets if they are to share in this dramatic growth,” Brilliant said.

Longer-term, exporters could benefit from increased regional GDP growth opening up demand for a different range of goods, with Peterson Institute economists predicting increased affluence among signatories as a result of free-flowing trade. Across the region, annual national incomes could increase by $165bn before 2030, it believes.

## Trans-Pacific Trade

Conversely, U.S. importers stand to be beneficiaries from the deal as cheaper goods are shipped out of the region.

Had it joined the TPP, the United States would have realized about $131 billion in increased real income per year, the American Action Forum believes, with SMEs driving the bulk of those gains.

With fears that China will be able to run roughshod over the region, it remains to be seen whether under a new administration the U.S. will reconsider joining the TPP to have greater standing.

The door remains open to the U.S., members of the TPP said. Joining the FTA would make it much easier for small to mid-sized businesses to trade across borders, increasing the affordability for domestic businesses to market their products overseas, while also eliminating import taxes on all made-in-America products shipped to TPP countries.

Though the RCEP is not the most comprehensive deal, with spotty coverage in the agriculture and services sector, it has created a path to a more coherent trading zone similar to those in Europe and North America. Western countries will be very wary that growth and leadership are once again shifting east.



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RCEP Free Trade Agreement 

The Regional Comprehensive Economic Partnership (RCEP) free trade agreement (FTA) aims to reduce trade barriers among one third of the world's population.


RCEP Signing to Offer Mixed Fortunes for U.S. Importers and Exporters

Whether it’s to release working capital to add new inventory, or to ensure operational continuity, businesses will always require financing to reach their potential.

Asset Based Lending (ABL) and Supply Chain Finance (SCF) are two distinct working capital solutions that can coexist to comprehensively manage the liquidity needs of companies.

## What is Asset Based Lending?

ABL is any kind of loan that is secured by an asset, most commonly receivables and inventory. It is a senior secured financing structure that is routinely funded by global banks and commercial finance companies, typically with hard limits both in terms of amount and tenor. Advances could range from 70-90% of eligible receivables and 50-70% of inventory, though these would vary depending on the inventory type.

By pledging receivables and inventory, ABL allows borrowers to accelerate cashflow and respond to an increase in product demand and growth.

While it’s a less risky proposition for the lender as it is self-liquidating in the event of a default, there are downsides for the borrower. ABL facilities are determined by the company’s receivables and inventory. Advance rates and eligibility are set by the lender and are often conservative and subjective particularly on inventory valuation.

The short falls of ABL can be solved with a Supply Chain Finance program to optimize payables.

## How Does Supply Chain Finance Work?

SCF is an often-unsecured arrangement that works alongside senior-secured credit facilities to create additional liquidity through trade payables.

It is a working capital program where a finance provider will pay suppliers upon shipment of their goods, while simultaneously offering credit to a buyer for an extended period, allowing them to sell the goods and also maintain a robust cash flow.

In doing this the corporate is able to achieve its balance sheet objectives while not leaving suppliers high and dry. By offering sight payments, and eliminating the risk of buyer default, they are also able to bolster their negotiating power.

Modern SCF leverages technology, such as a drawdown of funds to be triggered by logistical events such as the moment of shipment or delivery, offerings like the HarborTrade Platform can facilitate these with the click of a button.

Leveraging artificial intelligence, intuitive interfaces allow users to initiate orders, pay invoices and communicate with business partners, all in one simple-to-use paperless system.

## Creating Coexistence – Why Now?

As the pandemic has often highlighted insufficient inventory balances and supply chain disruptions, there is a growing shift from Just In Time (JIT) to a Just In Case (JIC) inventory model. JIT operations carry inventory as needed, whereas JIC operations hold a reserve of goods in preparation for a sudden increase in demand or supply chain disruption.

ABL is able to provide funds based on a company’s existing assets, but growing inventory further eats into cash flow and causes a longer DIO. Whether it is prompted by larger minimum orders or a consequence of vendor-managed inventory (VMI), a combination of solutions can be necessary. ABL fails to solve for this inventory burden because of the hard limits on inventory advance rates in the borrowing base formula.

Where SCF is able to stand apart from ABL is in allowing a company to shorten its cash conversion cycle (CCC) by improving Days Payable Outstanding (DPO). ABL is only able to solve for Days Inventory Outstanding (DIO) and Days Sales Outstanding (DSO) without contributing to working capital improvements upstream.

Therefore, companies that utilize both ABL and SCF in their working capital strategy maximize liquidity.

## Digitally Powered Supply Chain Finance

Traditional lenders lack the technology to interact in real-time with their clients’ supply chains, often remaining more conservative with lending limits as a consequence.

“Harbor is able to fill this funding gap for their customers. The purchasing management platform shows exactly what is being financed, at what value and where the goods are. Based on these insights, Harbor is able to fund trade operations with more comfort than traditional lenders and is able to provide longer payment terms,” said Joaquín Jiménez, director at Harbor.

## ABL & SCF In Motion

Harbor implemented a successful working capital program for a global consumer electronics company which developed a revolutionary flight simulation line requiring a diversification of its supplier base.

Those new suppliers required sight payments, while the new product line created an inventory burden their incumbent senior lender was unable to accommodate.

The necessity of JIC inventory, prompted by extremely strong demand and a solid growth trajectory, meant the company needed to optimize trade payables. Harbor was able to facilitate this by paying the suppliers upon shipment and extending longer payment terms to the buyer.

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## About Harbor

Harbor is a Supply Chain Finance provider offering working capital solutions to improve the cash conversion cycle. Our programs allow for early payments to suppliers so that buyers can optimize their own liquidity through trade credit.

The HarborTrade platform not only injects liquidity into the supply chain, but it allows for better vendor and procurement management by enhancing buyer and supplier to interaction, creating streamlined processes. With improved cash flow and administrative efficiencies, users of the HarborTrade platform can quickly adapt to the changing global economy and leverage technology to remain competitive.

Harbor facilitates trade both domestically and internationally with offices and representatives in Miami, Los Angeles, New York, Hong Kong, The Netherlands, Germany, and Mumbai.



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ABL and SCF Coexist 

Asset Based Lending (ABL) and Supply Chain Finance (SCF) are two distinct working capital solutions that coexist to address the liquidity needs of companies.

How Asset Based Lending and Supply Chain Finance Can Coexist

Billions of people were sent home from work as the Covid-19 pandemic took hold and digital solutions marked the way forward for most of us. The international trade sector was no different, where individuals and businesses were left scrambling to ensure business continuity in an industry that has long been reliant on paper-based transactions.

From a slowdown in courier services carrying paper documents to housebound bankers unable to issue letters of credit, there is a clear incentive for those involved in international trade to ramp up digitization efforts in order to be more shock-resistant in the future.

## Digitalization defined

Although sometimes used interchangeably, there is a difference between the two terms. Digitization is the act of converting data and documents from a physical format into a digital one. When this process is leveraged to improve business processes, it is called digitalization. The digitalization of trade is the concept that by using digital tools, businesses can increase the scope, speed, efficiency and volume of trade.

## Urgent orders to digitize

Due to Covid-19 disruptions to trade, the International Chamber of Commerce (ICC) posted an urgent memorandum to governments and banks urging them to void the legal requirement for paper-based documentation in favor of United Nations Commission on International Trade Law’s (UNCITRAL) Model Law on Electronic Transferable Records (MLETR) .

Under UNCITRAL’s model, documents such as bills of lading, warehouse receipts and promissory notes would be acceptable in electronic form. However, few countries have enacted the model.

## Embracing change

Digitalization will dramatically increase efficiency in international trade, an industry that has always been slow to embrace new technologies. An increased uptake in verified electronic documentation would allow for secure transactions, with better protections than paper, to be carried out at a greater speed.

Increased resiliency, reduced costs and a lower barrier to entry are all likely outcomes from a digitalization of trade processes. Previously, a physical presence was required on site in order for the signing of bills of lading, bills of exchange and checks, among others. With the advent of digital signatures, a significant hurdle can be eliminated.

“The use of electronic signatures has exploded, increasing efficiency in contracting and the delivery of products and services for both governments and enterprises,” an ICC working group on trade-related aspects of e-commerce said.

## Platforms driving efficiency

Trade finance platforms have played a key part in the digitalization drive. Offering a single location for buyers, suppliers and financiers to conduct business, they have been able to reduce human error, increase operational efficiency and improve communication for all stakeholders.

The most adept platforms are able to create purchase orders, allow users to track payments and shipments and leverage artificial intelligence (AI) to move from paper-based transactions to automated electronic invoicing and accounts payable.

The digital transition is unlikely to be quick or without pushback, however. Although the quest for digitalization is one that will drive huge efficiencies, concerns remain over the prevalence of fraud. A consistent theme across digitalization is to create a single source of truth amongst counterparties and to maintain high security standards where access and activity can be authenticated and auditable. An example of this is e-signature technology provided by software as a service (or SaaS) companies which use security protocols and encryption to protect the integrity of signatures.

## Interoperability is paramount

With a lack of industry standards, companies designing technological solutions are not working hand-in-hand, risking the creation of digital islands, where platforms are siloed from one another.

“Digital silos are an issue. As the adoption of digital solutions increases, it’s important to avoid fragmented platforms that will end up inhibiting growth as opposed to fostering it,” said Bryan Maloney, president and co-founder of Harbor, a platform-based global trade finance provider

Without standards that create interoperability, even the most well-intended digitization drives will struggle to succeed. The introduction of the ICC’s Digital Services Initiative (DSI) is directed at addressing that. The DSI is aimed at standardizing digital processes across more than 130 countries by enabling convergence of both technology systems and legal frameworks.

## Promising signs ahead

Large strides have been made this year in the move toward a digital transformation of trade.

Optimism also remains, especially in emerging countries. In Asia, advancements in mobile payment systems have driven high participation rates. Usage rates of fintech-powered services have doubled, and in some cases tripled, across key Asia-Pacific markets, according to an Ernst & Young report. In these countries, SMEs are particularly heavy users of banking and payment services demonstrating a willingness to lean into digitalization.

Though under the unfortunate circumstances of a global pandemic, an opportunity has been created to dramatically accelerate digitalization efforts that will create a safer and more resilient trade industry than ever before.

## About Harbor

Harbor is a Supply Chain Finance provider offering working capital solutions to improve the cash conversion cycle. Our programs allow for early payments to suppliers so that buyers can optimize their own liquidity through trade credit.

The HarborTrade platform not only injects liquidity into the supply chain, but it allows for better vendor and procurement management by allowing buyers and supplier to interact, creating streamlined processes. With improved cash flow and administrative efficiencies, users of the HarborTrade platform can quickly adapt to the changing global economy and leverage technology to remain competitive.

Harbor facilitates trade both domestically and internationally with offices and representatives in Miami, Los Angeles, New York, Hong Kong, The Netherlands, Germany, and Mumbai.

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Digital transformation of trade

There is an clear incentive for businesses involved in international trade to ramp up digitization efforts to be more shock-resistant in a Post-Pandemic World.

A Digital Transformation of Global Trade in a Post-Pandemic World

The HarborTrade platform not only injects liquidity into the supply chain, but it allows for better vendor and procurement management by allowing buyers and suppliers to interact creating streamlined processes. With improved cash flow and administrative efficiencies, users of the HarborTrade platform are on track to grow their businesses.

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HarborTrade Trade Finance Platform

HarborTrade platform allows for better procurement management by letting buyers and suppliers interact, creating streamlined processes with improved cash flow.

HarborTrade Platform Overview

From trade wars to Covid-19, recent events have caused a dramatic rethink of how businesses can remain resilient in a time of crisis. An overhaul of globalization as we know it has accelerated in recent years. Business leaders are now faced with the inevitable task of restructuring their supply chain.

Globalization has been in retreat from its peak in the mid-2000s following the financial crisis. What was once unavoidable took a U-turn as leaders began to appeal to a more self-sufficient approach to the economy.

The fragility of supply chains, exposed by the inability to rapidly source goods during the pandemic, demonstrates that looking inwards has some merit.

However, much like globalization was not an inexorable process, its breakdown should not be taken for granted.

## The rise of nearshoring

Bringing operations back home, or reshoring, is an attractive option for companies that were unable to deliver on contracts because of issues overseas. However, doing this at scale is an expensive task. Regulatory requirements in advanced economies are often onerous and create financial hurdles, such as higher minimum wages, that will reduce competitiveness.

If anything was learned from the issues faced during the pandemic, it is that a robust supply chain is a diverse one. The search for efficiency that resulted in manufacturing clustered in Asia is now being questioned.

Reshoring might not be the solution but increased regionalization appears extremely likely. Relying on nearby countries will allow firms to take advantage of cheaper labor, while also allowing for increased inventory and quality control. Where globalization suffers, nearshoring could see a boost.

While creating excess capacity can be costly, the alternatives might be worse.

## Geopolitical hurdles

The pandemic is not the sole catalyst. It is a mere acceleration of what was an already escalating trend.

Trade wars, sanctions and a retreat from international treaties have made it hard for businesses to have confidence when investing overseas. Public sentiment to goods sourced from certain countries has soured.

Cross-border goods flows have fallen in the last decade, relative to GDP growth, after increasing for several decades.

But where there is chaos there is opportunity.

Invoking a slogan of 2020, Nataranjan Chandrasekaran, chairman of Indian conglomerate Tata says “geopolitical conflicts have become a new normal for every business.”

Navigating conflicts and searching for stability has become a necessary cost of doing business during the withdrawal from globalization.

However, while there have been political victories for globalization skeptics, the signing of the EU-Mercosur trade agreement, along with the Trans-Pacific Partnership (TPP) shows that trade barriers are still being removed.

## Derisk, don’t decouple

Businesses across the world have seen their futures exposed to the perils of a fragile supply chain. Though a radical overhaul of supply chains in a search for a quick fix might be attractive on paper, it’s imperative they avoid acting rashly.

A de-risking of the supply chain, spreading operations over multiple locations, or nearshoring, are far more plausible solutions than a full decoupling with countries like China.

The idea of single-site sourcing will become one of the past. Years of low-inventory operations and just-in-time manufacturing could also be reassessed.

Challenges are sure to affect those managing supply chains in the coming years, but the key will be maintaining flexibility, diversifying and creating contingency plans.

A return to the peak of globalization is unlikely to be seen in the short-term, at least, but it is far from the end, with too many benefits derived to withdraw completely.



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Recent events have caused businesses to rethink how they can remain resilient in a time of crisis and are now tasked with restructuring supply chains.

Supply Chains Brace for Change

Harbor recently launched an innovative Supply Chain Finance program utilizing decentralized finance for a leading manufacturer of flight simulation equipment. Decentralized Finance, or DeFi, is a financial system independent of centralized banking and currencies and is unchartered territory for supply chain finance.

Global trade finance provider Harbor launched the initiative with Centrifuge, which provides the gateway to access Decentralized Finance liquidity through their suite of open source tools.

The pilot program was structured under a two tranche SPV with Harbor taking the junior position, while several individual and institutional investors assumed the senior tranche. Although the capital was raised in DAI, which is a stablecoin, Harbor hedged the potential USD volatility through a 60 day forward to match maturities. Assets originated under the Supply Chain Finance program were tokenized and sold to the SPV under a true sale receivables purchase agreement.

Harbor joined forces with Centrifuge on the deal to gain a better understanding of the mechanics of DeFi and its application in financing trade. Although not Harbor’s core focus currently, they see potential in utilizing crypto assets as a source of liquidity for future trade finance facilities.

“For the last few years, Harbor has been interested in distributed ledger technology and its use case in international trade, but we’ve just been watching from the sidelines until now,” said Bryan Maloney, CEO, Harbor. “There has been a lot of conversation surrounding DLT and its role in trade finance. I believe that DeFi is the most relevant application of this technology as of today.”


## About Centrifuge

[Centrifuge](https://centrifuge.io) is the protocol for decentralized asset finance. Asset Originators can access bankless liquidity, and investors can earn attractive yields from an open marketplace of asset pools. Centrifuge provides the gateway to access DeFi liquidity using their suite of open source tools: Tinlake, Centrifuge Chain and a P2P Protocol.

Powered by the community, DeFi aims to build the most efficient finance grid that distributes money in a fair and trustless way.

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Supply chain finance provider Harbor uses pooled crypto-assets to provide working capital to electronics manufacturer.

DeFi Takes flight with Harbor Supply Chain Finance

In a challenging year for companies involved in international trade, it has never been more important to unlock your working capital tied up in your procurement process.

Supply chains are being stretched to breaking point as buyers look to delay payment terms in order to preserve their own working capital. Yet by looking towards your supply chain as a source of liquidity it is possible to optimize your cash conversion cycle, deliver faster payments and ensure the viability of your suppliers for the future.

## Unlock working capital

The cash conversion cycle is often neglected as a metric that indicates the efficiency of a firm’s operations. Calculated by adding inventory days and days sales outstanding, both assets, minus the amount of days payables outstanding, a liability, it measures how long input is tied up in production and sales before it is converted into cash received.

The shorter your cash conversion cycle is, the better. Harbor’s supply chain finance program is able to deliver fast payments to your vendors, while also offering you lengthened payment terms.

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“Our supply chain finance program eliminates credit terms discussion during negotiation with suppliers by offering sight payments, at the same time optimizing the buyer’s accounts payable terms and cash conversion cycle,” said Bryan Maloney, president of Harbor.

## Strengthen your supply chain

It is apparent that small and medium sized suppliers are the first to feel the effect of a financial crisis and are now starved of working capital. Globally, suppliers have been struggling as payment terms are being renegotiated across industry segments, implementing a supply chain finance program with sight payments can ensure their survival.

Supply chain finance allows you to unlock hidden liquidity within your supply chain and boost free cash flow. Simultaneously, the program supports your global vendor base by offering accelerated payments. Securing a resilient supply chain enables you to deliver products when others cannot, leveraging opportunities to satisfy customers and create new business, leaving those with a fragile supply chain at a competitive disadvantage.

Harbor’s technology has been created with streamlining processes and decreasing costs associated with financing in mind. Onboarding is quick and efficient, while the implementation of artificial intelligence has helped to automate labor-intensive processes, saving you time and money. The platform and programs are agnostic in terms of industry and geography. Invest into your own supply chain with Harbor.

## About Harbor Trade Credit

Harbor is a Supply Chain Finance provider offering working capital solutions to improve the cash conversion cycle. Our programs allow for early payments to suppliers so that buyers can optimize their own liquidity through trade credit.

The HarborTrade platform not only injects liquidity into the supply chain, but it allows for better vendor and procurement management by allowing buyers and supplier to interact creating streamlined processes. With improved cash flow and administrative efficiencies, users of the HarborTrade platform can quickly adapt to the changing global economy and leverage technology to remain competitive.

Harbor facilitates trade both domestically and internationally with offices and representatives in Miami, Los Angeles, New York, Hong Kong,  Germany, and Mumbai.

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In a challenging year for companies involved in trade, it has never been more important to unlock your working capital tied up in your procurement process.

Shorten Your Cash Conversion Cycle and Build a Stronger Supply Chain

The U.S.-Mexico-Canada Agreement (USMCA) went into effect on July 1st, replacing NAFTA and modernizing the trade guidelines between the three North American countries.

Major changes have been made to the automotive industry, while new policies also have ramifications for labor practices, environmental standards and e-commerce.

The framework for the agreement largely comes from NAFTA, which already eliminated most tariffs between the U.S., Mexico and Canada, while also borrowing from the Trans-Pacific Partnership that the U.S. declined to join. 

## Small Businesses Receive Boost

Often neglected in major trade deals, much of the focus of the USMCA has been for the benefit of U.S. small businesses. It is the first trade agreement to include a full chapter dedicated to small business interests, targeted at redressing the U.S. trade deficit with both Mexico and Canada.

The Cross-Border Trade in Services chapter allows for companies to have greater market access, with small businesses now not required to have a foreign office or representative in order to do business in either of the other two countries.

The chapter also establishes a committee on small and medium-sized enterprise (SME) issues comprised of government officials from each country. This is aimed at improving business planning resources, the creation of advisory networks and increased access to financing.

The automotive industry will have to adjust the most, with automobiles requiring 75% of their components manufactured within the three countries, up from 62.5% under NAFTA. The changes to rules of origin (ROO) requirements will require significant examinations of supply chains in order to ensure compliance.

The added level of complexity means that supply chain managers will likely need to onboard new suppliers and in some cases re-shore production.

The deal went into effect in the middle of the Covid-19 pandemic, at a time that businesses are facing significant supply chain disruption. The Motor & Equipment Manufacturers Association says companies will be stretched to respond to the new rules due to the timing, as the U.S. economy suffers its sharpest recession on record.

However, depending on the type of vehicle, a grace period of up to seven years is being offered before penalties are introduced.

40-45% of automobile parts must also be made by workers earning at least $16 an hour by 2023, a move designed to reduce labor cost arbitrage. Greater labor protections have also been granted to Mexican workers, notably the ability to unionize.

The enforced wage hikes have also created concerns around vehicle costs which could damage sector growth at an already difficult time.

For the first time in decades both Canada and Mexico will raise de minimis shipment thresholds, meaning U.S. SMEs will be able to benefit from reduced customs duties and taxes, increasing their ability to reach new consumers.

“Implementation of USMCA will bring greater certainty to importers and exporters of all sizes throughout North America, which will facilitate their ability to invest for future growth and provide goods and services more efficiently,” says Tod Burwell, CEO and president of the Bankers Association for Finance and Trade.

American farmers will gain access to foreign markets as a result of the deal. Most notably Canada’s highly sought-after dairy and sugar sector, following the elimination of a program that protected domestic sellers.

USMCA also creates new origin rules and requirements for “secondary” textile components, such as sewing threads, narrowing elastics, and pocketing fabrics. These measures are aimed to encourage the use of these components in North American goods.

## Sunset clause creates uncertainty

With businesses facing sweeping changes, the addition of a sunset clause has done little to ease minds. Unlike NAFTA, which had no expiry, USMCA will come to an end after 16 years, while also being subject to a review every six years, at which point the three countries can decide to extend its lifespan.

Restructuring supply chains and incurring costs in the short-term will need to be balanced against the potential termination of the agreement.

Though it will likely come with higher costs, the prospect of nearshoring to Mexico and Canada is already in the minds of business owners, as trade tensions with China intensify.

The deal will have vast ramifications for those doing business in China. New ROO requirements will create issues for manufacturers relying on China. Businesses will need to make important decisions on whether to absorb tariff costs or restructure through nearshoring.

The deal also dictates that China is not a market economy and both Canada and Mexico will have to provide three-months’ notice if they are planning on negotiating a trade agreement with a non-market economy.

Overall, the net benefits to U.S. GDP is muted, with the International Trade Commission estimating it results in just a 0.35% increase after six years. Contrasted against the possibility of a breakdown of NAFTA it protects against a strong negative outcome.

Much uncertainty remains over how the deal will play out, with many regulations not being enforced for years. Though significant decisions will need to be taking to restructure supply chains, USMCA has created a positive outlook for U.S. SMEs.



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The U.S.-Mexico-Canada Agreement (USMCA) went into effect on July 1st, replacing NAFTA and modernizing the trade guidelines between the three countries.

The U.S.-Mexico-Canada Agreement (USMCA) to Benefit U.S. SME Importers and Exporters

The demand for supply chain finance (SCF) platforms has grown rapidly in recent years as providers aid businesses to create time and cost savings through the adoption of new technology.

Traditionally driven by international banks, high on-boarding costs, low transparency and a lack of scalability has limited the adoption of supply chain finance (SCF). But a recent shift towards digitization and automation have seen SCF transactions grow rapidly as businesses seek previously unattainable efficiencies.

## What can a Supply Chain Finance platform do?

Supply Chain Finance platforms have been critical to this trend, creating a digital trade repository to boost productivity.

A platform forms a single location for buyers, suppliers and financiers to serve their trade finance needs.

Whether it’s managing purchase orders, accepting invoices or offering advanced business analytics, SCF platforms are there to help.

“Technology platforms are 24/7 channels able to reduce human error, increase operational efficiency and improve communication for all stakeholders, in terms of both speed and quality,” said Andy Suen, lead engineer at Harbor.

## Does my business need a Supply Chain Finance platform?

In an unpredictable world, buyers are constantly seeking new ways to ensure business continuity and manage their risk.

The most adept platforms have been able to streamline cumbersome paperwork and allow users to leverage artificial intelligence (AI) to move from paper-based transactions to automated electronic invoicing.

“The application of AI has already helped to automate purchase order uploads and we have a roadmap to adopt more of it to enhance our decision models with AI capabilities,” said Suen.

SCF platforms not only provide businesses with data clarity but allow for greater risk management by using that data to assess the credit worthiness of existing and potential clients.

## HarborTrade Platform: Facilitating transparency and communication

Historically, large corporates and banks were the only beneficiaries of digital technology in this sector, but the HarborTrade Platform is bringing that to the middle market.

It allows companies of any size to benefit from accounts payable automation, vendor management tools and access transaction data.

Simplicity, scalability and automation are critical factors when choosing a SCF platform. The HarborTrade Platform excels at all three.

An intuitive interface allows users to initiate orders, pay invoices and communicate with business partners, all in one simple-to-use paperless system.

“The HarborTrade Platform is built on the Google Cloud Platform, which provides us an open, infinitely scalable and robust infrastructure. It also gives us flexibility to use the best tools in our production ecosystem.”

“We picked our technology stack carefully, using industry standard protocols such as OAuth2 for our data API integration, allowing us to seamlessly integrate with cloud-based solution providers like Firebase and SendGrid,” says Suen.

Pre-built templates and processes allow users to onboard new suppliers and create invoices quicker than ever before.

Buyer and supplier interaction on the platform allows for open lines of communication in one location. All parties can access real-time supply chain analytics, ensuring transparent shipment and transaction data for both buyer and supplier.

This greater visibility and coordination across the supply chain not only allows for improved collaboration with a wider base of suppliers, but the creation of diversified, efficient and more resilient supply chains.

Free to use as a supply chain management tool, HarborTrade Platform is not just about financing, but can be the first step in any business’s digital transformation.

“We have focused on building the best client experience, which will improve your bottom line,” says Suen.

Harbor’s unique aggregation solution provides suppliers with the working capital they crucially need, while also offering buyers additional free cash flow through the aggregation of smaller supplier bases.

Link your physical and financial supply chains and let the HarborTrade Platform accelerate payments to your suppliers around the globe with third-party funding that can also boost your working capital.


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A platform forms a single location for buyers, suppliers and financiers to serve their trade finance needs.

Can My Business Benefit From a Supply Chain Finance Platform?

Whether it’s a natural disaster, a trade war or a global pandemic, suppliers face numerous risks. In an unpredictable world it has never been more important to diversify your supply chain to protect your business from supply shocks.

We spoke to Bryan Maloney, president of Harbor and Robert Krieger, an industry veteran and president of Krieger Worldwide, a global logistics and supply chain services firm, to discuss what businesses need to be aware of when building their supply chain and how diversification can be critical to ensure business continuity.

In the last few decades, manufacturing has predominantly gathered geographically around regions specialized in making high-quality products. An unintended consequence of this clustering is that many companies have an overdependence on a small number of locales and an insufficient number of suppliers, meaning their supply chains are prone to disruption.

“Limiting risk exposure is the primary goal of a diversified supply chain”, said Maloney.

Buying from one supplier has certain benefits but having multiple suppliers to circumvent disruptions, financial issues, or demand variations is key to growing a successful company.

Having a carefully-planned supply chain means buyers can avoid the risks that social or political incidents have on costs and product availability.

“You have to avoid putting all your eggs in one basket. Even with the greatest deal in the world a ship can break down or a company can have financial issues,” said Krieger.

## Avoiding Disruption

It has been hard to avoid mention of trade wars, sanctions and tariffs, with U.S.-China tensions routinely at the forefront of the news cycle.

“Trade wars are certainly not on the horizon anymore. They’re here and in many cases companies have had to legally figure out how to avoid punitive tariffs,” said Krieger.

A critical factor in mitigating risk is to have multiple suppliers in different locations to avoid getting caught out by a natural disaster or geopolitical conflict.

With inventory shortages across a plethora of industries during the Covid-19 pandemic it has never been more apparent that diversifying supply chains is a necessity rather than a luxury.

“Protecting your business by sourcing volumes from multiple suppliers means that if one is disrupted, you’re able to increase volume from an unaffected supplier,” Krieger said.

 Global freight forwarding companies, like Krieger, don’t just help corporates get their goods delivered on time, they assist organizations with reducing risk and cost. For example, helping to minimize the customs duties a company pays or finding ways of getting goods delivered faster to improve their bottom line. If problems do arise, global firms like Krieger can be a great partner because they are committed to reacting swiftly and affirmatively to minimize delays in the delivery of products.

## Streamlining Relationships

 Diversification of the physical supply chain leads to the need for optimization on the financial supply chain and a rethinking of the procure-to-pay process. The strong connection between the procurement and finance team has never been so critical as supply chain and sourcing strategies evolve.

Establishing relationships with new suppliers can be difficult and labor-intensive work, but the HarborTrade Platform can alleviate many of these concerns.

“Diversification can create new hurdles to overcome but procurement on the HarborTrade Platform allows for efficient vendor management,” says Maloney.

Buyers and sellers are onboarded to the platform quickly and higher overheads involved in negotiation and relationship management are avoided with longer payment terms.

With HarborTrade, as soon as a client receives an invoice from a supplier, Harbor will pay the supplier upon shipment, with the buyer then receiving up to 120 days to pay. This ensures all parties have the working capital required to maintain a healthy relationship.

“The supply chain finance program eliminates credit terms discussion during negotiation with suppliers by offering sight payments, at the same time optimizing the buyer’s accounts payable terms and cash conversion cycle,” Maloney continued.

Though at first it might seem a difficult task, the benefits to be gained from a properly diversified supply chain are immeasurable.

Securing a resilient supply chain allows companies to deliver products when others cannot, giving them the opportunity to satisfy customers and create new business, leaving those with a fragile supply chain at a competitive disadvantage.

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Supply Chain Diversification

Whether it’s a natural disaster, a trade war or a global pandemic, it is important to diversify your supply chain to protect your business from supply shocks.

In a Challenging Economy, Supply Chain Diversification Is an Invaluable Tool in Risk Mitigation

Running a business creates a variety of challenges to overcome, but one universal issue is managing free cash flow and accessing working capital. The problem is magnified among small and mid-sized enterprises (SMEs), for whom it routinely separates success from failure.

SMEs are the heartbeat of the global supply chain, yet constitute the weakest link, as access to credit is limited. Bills and other expenses pile up, while on average they have to wait 36 days to convert invoices to cash, according to a survey by PwC. Nearly 80% of SMEs fear cash flow will be affected by delayed payments.

Large corporates’ supply chain finance (SCF) programs are often seen as the silver bullet to alleviating their suppliers cash squeeze. But in reality, most SMEs are left unable to access the financing offered by these programs due to banks’ internal administration and profitability hurdles.

Banks have cumbersome and document intense KYC and onboarding processes, that can take several weeks for parties to complete. Carrying out KYC checks and following AML protocols means a minimum spend threshold is often imposed, ensuring the SME segments of the supplier base often remain untouched in the SCF programs from which they stand the most to gain. Demand is often dominated by anchor suppliers that offer high-spend, low-workload opportunities for SCF platforms and their lenders.

SMEs are therefore often left relying on more expensive and much scarcer overdraft and loan facilities as financing options.

Typically SCF programs only end up onboarding top tier suppliers, never offering financing to the hundreds of suppliers making up the mid and long tail, who need the early payment the most.

As a result, many programs fail to deliver on expectations simply due to a lack of supplier adoption.

By aggregating small and medium-sized suppliers, Harbor Trade Credit is able to deliver a win-win-win proposition, where buyers and suppliers obtain operational and working capital efficiencies, while SCF platform operators and financial institutions enjoy growth in the utilization of their programs, without the hassle of on-boarding.

“Supply chain financing works for larger companies, the industry has been around for years but no-one has managed to solve the mid-to-long tail. Technology alone won’t do the trick but the structuring Harbor brings, combined with technological innovations can solve the problem,” said Joaquín Jiménez Krijgsman, Harbor’s director of business development.

Harbor’s unique aggregation solution provides suppliers with the working capital they crucially need, while also offering buyers additional free cash flow through the aggregation of smaller supplier bases.

Streamlining through digitization, Harbor is able to deliver payment at sight to the supplier, eliminating the risk of buyer default, while also offering the buyer up to 120-day credit terms, improving their liquidity.

Harbor’s proprietary technology and service is able to reduce the cost and time associated with on-boarding suppliers and simplify workflows when dealing with SMEs, accelerating the adoption and overall utilization of SCF programs.



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Working capital efficiency 

By aggregating suppliers, Harbor is able to deliver a win-win-win proposition, where buyers and suppliers obtain operational and working capital efficiencies

Solving the Long Tail Challenge: How Harbor Creates a Win-Win Proposition for Existing SCF Program Users

For nearly three decades, Hong Kong has held special trade status with the United States, allowing it to prosper as a global financial and trade hub. A recent clampdown from Beijing risks the special administrative region losing that status, with global businesses becoming collateral damage.

Hong Kong’s autonomy, under the “one country, two systems” framework has been key to establishing its status as a gateway between China and the rest of the world. That status is now in jeopardy, following the National People’s Congress’ imposition of a national security law that is making foreign governments question whether that autonomy remains.

This has led the U.S. to begin the process of removing Hong Kong’s preferential treatment. As it stands, currency can be exchanged freely with the Hong Kong dollar, there are little to no tariffs and other costs when it comes to trade, and visa-free travel allows for simpler business dealings.

All this has led Hong Kong to become the U.S.’ 21st largest goods trading partner, with $43.6 billion in two-way trade during 2018, and another $45bn in re-exports to the U.S. Should the special trade status be revoked, these benefits could all disappear.

“The loss of Hong Kong’s ‘special status’ is another catalyst to push procurement outside of China,” says Bryan Maloney, president and co-founder of Harbor.

While it’s not yet clear how exactly both the national security law or the revocation Hong Kong’s special trade status will look, damage to Hong Kong’s special trading status could threaten the viability of the more than 1,300 U.S. companies operating in Hong Kong.

Over the past year, Harbor Trade Credit has seen corporates rethinking their supply chains and procurement strategies. Surveys by the American Chamber of Commerce already show U.S. firms plan on scaling back their investments in the city.

“The uncertainty created by U.S.-China trade relations, combined with increased labor costs have shifted supply chains,” Maloney says.

It’s these changes that create an opportunity to implement supply chain finance programs and utilize vendor management tools on the HarborTrade Platform.

“Harbor has the flexibility to follow our client’s procurement activity across the globe and we have seen an uptick in Southeast Asia and Latin America in particular,’ Maloney continued. “In January, one of our clients, an e-commerce furniture retailer sought to onboard new manufactures in Vietnam and Malaysia as a consequence of tariffs being imposed on Chinese exports.”

The lack of a trading history with the new suppliers meant that a financing solution was required, as buyers are often unable or unwilling to provide credit terms when establishing new relationships. Harbor was able to step in, with its platform allowing buyers to submit purchase orders to their vendors, while also letting the vendors take advantage of early payments post-shipment and access often scarce working capital.

While Hong Kong will always remain a critical business hub in the region, due to its status as the gateway to mainland China, it is clear that supply chains are shifting. Consequently, the ability to establish and streamline new relationships with suppliers is critical. With HarborTrade Platform this has never been easier.

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The loss of Hong Kong’s ‘special status’ is another catalyst to push procurement outside of China.

The Potential Loss of Hong Kong’s “Special Status” Forces U.S. Corporates to Rethink Procurement Strategies

Supply Chain professionals understand the benefits of a diversified supplier base – it allows for favorable pricing through market competition, risk mitigation of supply chain disruption as well as access to a diversified product offering and flexibility on lead times and delivery.

## Ways to diversify your supply chain:

- **A mix of larger and smaller suppliers** – smaller suppliers tend to be more adaptive to change and nimble, while larger supplier may be viewed as more reliable and are more prepared to withstand economic hardship.
 
- **Geographic** – Mitigate risks of physical supply chain disruptions caused my political events, natural disasters, economic conditions, etc.
- **Multi-Sourcing** – purchasing the same goods from a handful of suppliers, a great strategy to mitigate supplier capacity risk

## Supply Chain Diversification is a good thing, but it comes with its challenges.

Granular and diverse procurement strategy means understanding culture, dealing with time zones, tracking fulfillment and logistics and managing many payments. These challenges often push buyers towards consolidation or outsourcing to solve for inefficiencies in vendor management.

Vendor Management does not mean that your procurement team has to work with a handful of larger suppliers through consolidation. It’s about finding solutions to the pain points in the procurement process and reaping the benefits of the long tail/diversified supplier base. Using a streamlined, organized Supply Chain Management process, buyers can optimize cost of goods and mitigate supply chain disruptions. This aggregation leads to efficiency, cost savings and profitability.

Harbor’s Supply Chain Finance program includes vendor management tools to deal with a diverse supplier base, at the same time it optimizes and harmonizes payment terms with these suppliers to provide liquidity to both buyers and suppliers alike.

## With the intuitive HarborTrade platform buyers can:

- Improve communication with Suppliers
- Issue Purchase Orders
- Track Fulfillment
- Reduce discrepancies in PO/Invoicing
- Improve liquidity across supply chain

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Diversified supply chains 

The importance of a diversified supplier base and ways to diversify your supply chain.


Diversified Supply Chains: Aggregation vs. Consolidation

Harbor has launched a new Supply Chain Finance program in January for an e-commerce furniture retailer. As the client looked to onboard new manufacturers in Vietnam and Malaysia, they needed a financing solution to offer these suppliers sight payments. The solution is two fold: liquidity for both parties as well as credit risk mitigation for the exporter. The buyer utilizes Harbor’s platform in order to deliver purchase orders to the participating vendors, the vendors then take advantage of early payments made post-shipment. Buyer and Supplier interact on the platform which allows for a frictionless procurement process through Harbor’s trade finance and supply chain management solutions.

Over the past year we have seen an upward trend towards corporates rethinking their supply chains and procurement strategies. This is partly driven by uncertainty of US-China trade relations as well as increased labor costs in China. Supply Chains are shifting toward countries like Malaysia, Vietnam, Cambodia, Indonesia and others. These changes may have unforeseen consequences, namely suppliers ability to support credit terms. Due to the fact that suppliers have no trading history with buyers, they may be unable or unwilling to provide credit terms. Additionally, it is well known that SME suppliers in these markets lack sufficient access to working capital.

We believe these changes create an opportunity to implement Supply Chain Finance programs and utilize vendor management tools on Harbor’s platform.

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Supply chain finance program for furniture retailer

Harbor has launched a new Supply Chain Finance program in January for an e-commerce furniture retailer.

Harbor Announces Supply Chain Finance Program for E-Commerce Furniture Retailer

Harbor Trade Credit understands trade as well as the need of buyers and suppliers

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Harbor Trade Credit Introduction

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Harbor Trade Credit Client Testimonials

Supply Chain Finance with Harbor Trade Credit

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What Can Harbor Trade Credit Do For Your Business?

Companies everywhere depend on working capital to keep their business afloat and as a means to pay for new developments and growth. When cash flow is not consistent due to fluctuation in sales, product seasonality or other factors that can cause cash levels to dip, businesses opt for financing which can keep things on track.

For businesses involved in trade, Supply Chain Finance is a popular choice and it’s changing the way buyers and suppliers do business. We’ll explain why Supply Chain Finance is a big deal and how it’s benefitting buyers all over the world.

## What is Supply Chain Finance?

Supply Chain Finance is a specialized type of working capital program whereby a finance provider such as Harbor Trade Credit pays the supplier when goods are shipped to the buyer, then extends credit to the buyer for a predetermined length of time. When the buyer can sell goods to their customers before a payment is due to the finance partner, their cash flow improves.

Suppliers also benefit from Supply Chain Finance because they receive prompt payment in full when they ship goods, instead of having to face payment delays or needing to extend credit to buyers.

In simple terms, a Supply Chain Finance program offers short-term credit so that the buyer and supplier can make the best use of working capital.

## Why is Supply Chain Finance Important?

Think of it this way: the global supply chain is expanding throughout the world. On one side, there are international buyers, and on the other, a group of distinct suppliers based in different countries. In every case, buyers want to lengthen their payment terms with suppliers, while suppliers are looking to get paid as soon as possible. Despite both parties having contrasting interests, a suitable supply chain financing program allows them to align.

Harbor Trade Credit’s Supply Chain Finance program pays suppliers promptly, while allowing the buyer up to 120 days to pay. The result? Both parties benefit. While suppliers get a boost in working capital, buyers tap into improved cash flow. As an added benefit, risk is reduced through the supply chain since the finance partner assumes the risk of nonpayment.

## How Does It Work?

Harbor Trade Credit makes setting up a Supply Chain Finance program easy and fast with just a few steps:

1. The buyer submits an application form and financial statements to Harbor Trade Credit.
2. Harbor determines a credit limit for the buyer ranging from $200,000 to $8 million.
3. The buyer can use the limit to pay suppliers of their choice, using the online HarborTrade system
4. All payments, shipment notifications and communication between the buyer and supplier can be viewed and tracked on the HarborTrade system.

## Who Uses Supply Chain Finance?

Importers, manufacturers, wholesalers, distributors and brands are all using Supply Chain Finance. Businesses qualified for a program with Harbor Trade Credit have a good credit rating and do somewhere between $10 million and $200 million in annual revenue.

Many businesses already have financing in place such as a bank line of credit. What’s unique about Harbor’s program is that businesses can keep their existing financing arrangements and benefit from even more working capital. Collateral is not required for the program.

## How Does Supply Chain Finance Benefit Buyers?
When buyers set up a Supply Chain Finance program with Harbor Trade Credit, they benefit in all kinds of ways.

### Improved Cash Flow
The most important benefit to a Supply Chain Finance Program is the addition of working capital to the business. Harbor Trade Credit gives the buyer up to 120 days to pay for their purchased goods.

Think of all the ways having more working capital can benefit your business growth strategy. From hiring additional employees or enhancing your marketing initiatives, to expanding your warehouse space, there is a lot that can be accomplished when a business has more cash.

### Streamlined Business Processes
With Harbor Trade Credit’s online platform, clients can initiate orders, view and track shipments and pay invoices in one easy-to-use, paperless system.

### Negotiating Power
When buyers pay their suppliers at sight, they gain an advantage when negotiating their cost of goods. A lower cost of goods means a higher profit margin for the buyer.

## Ready to Grow Your Business?

Call Harbor to learn more about our Supply Chain Finance program and how you can begin.

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Supply chain finance benefits to buyers

When buyers set up a Supply Chain Finance program with Harbor, they benefit from improved cash flow, streamlined business processes, and negotiating power.

Supply Chain Finance and How It’s Benefitting Buyers

All businesses need working capital to stay afloat. Those involved in international trade are often faced with liquidity challenges both up and downstream in the supply chain. The buyer needs to pay the supplier upfront but faces deferred payments downstream when selling to customers, thus lengthening the cash conversion cycle. This is where Supply Chain Finance programs come to the rescue.

Supply Chain Finance programs are increasingly being implemented across the globe due to the working capital benefits to both buyers and suppliers and the rise of new providers and platforms.

With Supply Chain Finance, a provider like Harbor pays the supplier when the goods are shipped and extends credit to the buyer, giving them the opportunity to sell the goods before payment is due. The supplier is happy to receive prompt payment for the sold goods and the buyer benefits from optimized cash flow.

There are a number of different options available for Supply Chain Finance providers, so how do you find the one that’s right for your business? Generally, there are two types of Supply Chain Finance providers: banks and non-bank lenders.

Banks are typically not a good fit for most middle market companies looking for Supply Chain Finance for the following reasons: 
- Banks prefer to work with large, rated companies with annual revenues over $1 billion
- Complex and time consuming procedures for onboarding both the buyer and suppliers
- Not all suppliers qualify for the program due to minimum spend or supplier location
 
Instead, middle market businesses tend to work with non-bank Supply Chain Finance providers which offer less rigid qualifying criteria and easier onboarding for the buyer and suppliers. When selecting a non-bank provider, it’s important to understand their capabilities and limitations as it applies to your particular business. While rates are fairly comparable from one trade finance provider to the next, there are other factors to consider such as flexibility, convenience, customer service and efficiency.

Each non-bank Supply Chain Finance provider also has a set of requirements for the businesses they can work with such as:

- Industry type
- Annual revenue
- Credit score and financial position of the business
- Location

Harbor is a popular choice for non-bank Supply Chain Financing as they have effectively streamlined the entire buyer/supplier experience through their online HarborTrade platform.

## Advantages to working with Harbor:
- HarborTrade platform simplifies the procurement and payment process. Clients can initiate orders, view and track shipments and pay invoices in one easy-to-use system.
- Harbor offers up to 120 days to pay suppliers instead of the standard 30 to 60 days, creating even more working capital for the business.
- Fast approval and onboarding for new buyers and suppliers.
- Harbor allows you to keep your existing financing arrangements such as term loans or lines of credit.
- Unsecured, non-invasive trade credit. No collateral required.
- The program works like a virtual credit card – pay suppliers of your choice.
- Harbor works with most industries and suppliers in almost all jurisdictions around the world.
- Improved communication with buyers and suppliers on HarborTrade platform.
- Clients have a dedicated account manager always available to provide support.

For more information on Supply Chain Finance with Harbor contact info@harbortrade.com.

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Harbor is a non-bank supply chain finance provider that has effectively streamlined the entire buyer/supplier experience.

How to Choose a Supply Chain Finance Provider That’s Right for Your Business

Harbor recently launched an online system that is changing the way buyers and suppliers handle global trade.

By using the HarborTrade platform, Harbor’s clients are benefitting from prompt payments which improves cash flow for both buyer and supplier, better organization and efficiency in the procurement process and enhanced communication between both parties.

Here’s how it works. A business that imports goods from domestic or international suppliers applies for a supply chain finance program with Harbor Trade Credit. Harbor provides the buyer with a credit limit which can be used to pay suppliers of their choice. The buyer and suppliers are onboarded to the platform in just a few easy steps.

The HarborTrade platform allows users to initiate orders, view and track shipments and pay invoices, all in one simple to use paperless system. When a client receives an invoice from a supplier, Harbor pays the supplier at shipment and gives the buyer up to 120 days to pay, creating valuable working capital.

In addition, the buyer and supplier can communicate through the messaging portal, centralizing communication and eliminating the need for back and forth email correspondence which can be scattered among employees.

“We’re excited to unveil the new HarborTrade platform and introduce buyers and suppliers to a more streamlined approach to trade finance,” said Katie Newton, Head of Origination, Harbor. “Since clients can keep any existing financing they have in place and do not have to put forth any collateral, our program is a great solution for all kinds of importers.”

With improved cash flow and administrative efficiencies, users of the HarborTrade platform are on track to grow their businesses.

Harbor facilitates trade both domestically and internationally with offices and representatives in Miami, Los Angeles, New York, Hong Kong, Germany and Mumbai.

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Harbor’s clients are benefitting from prompt payments which improves cash flow for both buyer and supplier and better organizational efficiency. 

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