3Rings Capital

Happy New Month! 🤗

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

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

We are rooting for you ❤️

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

Best practices to consider as you develop your strategy:

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

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

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

KEY TRENDS IN TRADE FINANCE:

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

ACCOUNT PAYABLE

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

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

UNLOCKING VALUE FROM ACCOUNT PAYABLE

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

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

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

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

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

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

Source - Trade Finance Global

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

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

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

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

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

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

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

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

China is becoming increasingly pragmatic in its relations with Africa. In particular, the Asian giant, Africa’s single largest creditor is attuned to the colossal and continentwide problem of debt unsustainability.

https://lnkd.in/dqeA6xfw

Key point - Before we feed the world, we need to feed ourselves as a continent. It's very important. This starts by nurturing our minds with good things of life and dwell in positivity

Africa and the Middle East have made considerable efforts in recent years to catch up with other economic regions (EU, Americas, Asia) in terms of protecting their citizenry against substandard and hazardous products. We look at its effect on trade and the solutions that are available to exporters.
https://www.sgs.com/en/news/2022/03/the-challenge-of-import-regulations-in-africa-and-the-middle-east

South Africa is an African fintech frontrunner, with several recent regulatory developments taking center stage as the country prepares to fully adopt fintech and its various sub-segments. South Africa also has specific compliance and due diligence issues that must be addressed before and during fintech transactions.
https://lnkd.in/deHy3eAK

The global financial system finds itself in a very different situation from a few years ago when interest rates were at multi-year lows and stock prices were at all-time high highs.

https://african.business/2022/06/economy/raising-capital-in-a-tough-global-environment/

Nigeria lost roughly US$1bn in export revenue to crude theft in the first quarter of the year, officials say, as criminal networks work to capitalise on soaring energy prices in the wake of the Ukraine crisis.

Out of the 141 million barrels of oil produced in the first three months of 2022, only about 132 million were received at export terminals, the head of the Nigerian regulator told Reuters this month.

https://www.gtreview.com/news/africa/nigerian-oil-export-revenues-hit-by-us1bn-surge-in-theft/

Small and Medium-Sized Enterprises (SMEs), make up the vast majority of businesses and contribute significantly to national GDPs. They also stand to benefit from digital technologies even though many innovations are initially aimed at large and multinational corporates. The Bank Payment Obligation is a strong example of a digital tool that is well suited to SMEs.

At 3rings Capital, we offer the possibility of SMEs participating in “supply chain communities” as part of our digital supply chain finance portal. This enables businesses to share financial information with their supply chain so mutually beneficial payment terms can be agreed, serving to alleviate liquidity squeezes across the length of the supply chain.

We are a digital trade finance platform with a paperless application process with no hard collateral.

Our goal is to increase the competitiveness of African SMEs for cross border trade.

Kindly follow us for more updates. https://3ringscapital.com/

In today’s fast-paced and interconnected world, governments are facing new regulatory challenges, not just in managing issues arising from digital disruption, but also in ensuring that the opportunities and benefits from digital trade can be realised and shared inclusively.

What is digital trade?
Digital trade encompasses digitally-enabled transactions of trade in goods and services that can either be digitally or physically delivered, and that involve consumers, firms, and governments.

How is digitalisation changing trade?

Digitalisation increases the scale, scope and speed of trade. It allows firms to bring new products and services to a larger number of digitally-connected customers across the globe. It also enables firms, notably smaller ones, to use new and innovative digital tools to overcome barriers to growth, helping facilitate payments, enabling collaboration, avoiding investment in fixed assets through the use of cloud-based services, and using alternative funding mechanisms such as crowdfunding.

Rapid technological developments also facilitate the rise of services in international cross-border trade. Information and communication technology services form the backbone of digital trade, providing the necessary network infrastructure and underpinning the digitisation of other types of services. New technologies have also facilitated the rise of digitally enabled services like 3rings Capital, to keep track of vendor's information and trade investment.

Invest in our all-in-one digital platform. 3Rings is here to connect the dots for African SMEs by providing trade finance solutions to facilitate cross border trade for inter-African and international trade for exporters from Africa. We are a digital trade finance platform with a paperless application process with no hard collateral.

Our goal is to increase the competitiveness of African SMEs for cross border trade.

Kindly follow us for more updates. https://3ringscapital.com/

The big difference between balance of trade and balance of payments is that balance of trade signifies the difference between the value of a country's exports and imports while balance of payment shows the difference between the inflow and outflow of foreign currency or foreign exchange payments.

Balance of trade includes the transactions related to goods, while the balance of payment covers transactions associated with the exchange of both services and goods.

Balance of payment keeps records of all the global financial transactions made by citizens of a country. In contrast, the balance of trade keeps records of all the value of imports and exports of a country over a certain period.

There is no limit to the number of amendments that can be made to a letter of credit under any published ICC rule.

This being said, in practice, it may not be wise to amend it too many times.

There were once revocable letters of credit.

This type of letter could be cancelled or amended at any time by either the buyer or the issuing bank without any requirement for notification.

This created a lot of complications and led the ICC to remove revocable letters of credit in the UCP 600 from anywhere within their jurisdiction.

Unless all three parties involved can agree to terms, irrevocable letters cannot be cancelled, amended, or reversed.

Source: Trade Finance Global

Small companies have increasingly started adopting artificial intelligence (AI) based solutions, taking supply chain management to the next level. These include demand forecasting models, end-to-end transparency, dynamic planning optimization to manage inventory and automation to reduce waste.

https://www.dripcapital.com/resources/blog/benefits-of-tech-for-global-trade

Happy New Month 🤗
Joyful things are happening this month. Stay focused!

Trade Finance Global surveyed firms throughout Europe to gain an understanding of SMEs’ trade finance usage norms and their propensity to pay for new or additional trade finance products and services.

The survey was designed to gain insight into how the current financing costs, revenue, and inventory levels impact the likelihood of European SMEs to pay for new trade finance services at a 4%-8% per annum price point

https://platform.tradefinanceglobal.com/2022/07/20/sme-appetite-for-trade-finance/content.html

The objective of the new government roadmap 2021-2025 is to make Togo a modern state with a sustainable and inclusive economic growth. Creating more than 35,000 direct and indirect jobs, the Industrial Platform of Adétikopé aims to promote attractiveness and attract investors to develop industrial and multi-sectorial activities.
https://www.afreximbank.com/afreximbank-ecobank-togo-and-bia-togo-finance-the-construction-of-the-adetikope-industrial-platform%ef%bf%bc/

A Quote is a promise in form of a formal statement by the seller that he would provide the product at a specified time and price. The Seller would be presenting the quotation in a proforma invoice form. A Quote is a primary document of price which may be negotiable. The seller needs to understand that International market is buyer’s market and thus the price quoted by an exporter should be reasonable as well as final. Government policies, competition, elasticity of demand play a very significant role in determining the price/ quote of the product.

A Quote is a crucial document which will benefit the seller as well as the buyer and thus there should be a standard checklist. This checklist should have all the important details such as price, time of delivery, taxes, bank fees if any, transportation mode and price etc.

Below is the checklist for preparing an Export quote –

1. Details of Seller i.e. name, contact information, address, id proof, tax proof

2. Place and time of selling of products

3. Details of Buyer i.e. name, contact information, address, id proof, tax proof

4. Ship to- party’s full details i.e name, contact information, address, id proof, tax proof

5. Detailed description of the product including

a. Quality and Grade
b. Name by which the product is known locally and in the market of the buyer
c. Harmonized system number
d. Currency
e. Price per unit of the product
f. Country of origin
g. Number of Quantity
h. Symbols, numbers and marks under which the product is sold

6. The details of country in which shipment will be done

7. All kind of goods and services that would be provided by the buyer for the product of the merchandise

8. Some additional information such as,

a. Mode of payment
b. License required if any
c. Any certificates or statements that would be required by the buyer’s country
d. Relevant laws
e. Expiration of the quotation date
f. Where title would be transferred from the seller to that of the buyer

Price is a significant variable as it is the major factor affecting the choice of the consumer. It is very important for a seller to quote the price properly and for this, he should keep following things in mind –

1. Range of products that are been offered.

2. Frequency of purchase

3. Credit offered.

4. Prompt acceptance as well as settlement of the claims.

5. Preference or prejudice for goods originating from that of a particular source.

6. After- sales service in products such as machine tools, consumer durables.

7. Prompt deliveries and continuity in supply.

8. Presumed relationship between price and quality

9. Product differentiation along with brand image

10. Specialty value goods and gift items

11. Unique value goods and gift items

12. Aggressive marketing and sales promotion

Source: iiiEM - International Institute of Import & Export Management

As the world’s youngest continent, with a median age of 20 years and 60 % of the population under the age of 25, Africa has the potential to shape geopolitics and world economics in the decades to come.
https://www.tradefinanceglobal.com/posts/africa-is-the-future-all-eyes-turn-to-youngest-continent-as-next-frontier-for-growth/

Each lender has specific requirements and criteria which must be addressed before funds can be advanced to a business.
Here are the main stages of the credit process
https://www.tradefinanceglobal.com/trade-finance/trade-finance-process/