Moving boxes across nations is only one aspect of the supply chain, and there are other factors at play in the current global issue than just capacity and driver shortages.

Participants in international trade must deal with dozens of vendors and the difficulties that come with them, including moving and storing products, passing customs, navigating different legal systems and currencies, paying and receiving money from across borders, and fleet finance. Due to the fact that capital might become immobilized for months as a product goes through the supply chain, industry participants frequently face cash constraints. Companies can accelerate access to working cash by implementing financial services technology at each stage of the cycle.

Fintech-enabled markets are those “with tech-enabled financial services incorporated directly into the platform,” according to NFX, who coined the term. In general, markets serve as a way to address certain demands within a particular industry or niche. They eliminate the hassles associated with managing numerous vendors when used in the supply chain because all pertinent services are provided via a single platform. DealRoom estimates that this sort of marketplace has an enterprise value-to-sales (EV/sales) ratio of 6.7x, which is higher than the EV/sales ratios of 5.3x and 4.6x for financial services and other marketplaces, respectively.

In markets, a “virtuous cycle” is created. They can be used by businesses to locate vendors who can assist in shipping goods worldwide. More suppliers are interested in taking on new business as a result of increased demand, and as there are more suppliers available, more customers can find the ideal match for their requirements. Higher service quality benefits both sides of the market as demand and supply are better matched. Small and large businesses alike may compete and expand on their own terms thanks to better access to vital payment infrastructure and funding.

On the other hand, suppliers can grow their clientele. They are able to offer more solutions by gaining a greater understanding of their customer’s demands, and as a result, customers are more eager to divulge useful information. Making better business decisions is aided by the data layer for financial goods. Fintech-enabled markets also provide a better customer experience because more of their problems are handled in a single encounter, which reduces their pain points.

Companies get a competitive advantage by being given the freedom to concentrate on what they do best while someone else handles the logistics. If not, they would have to engage someone to oversee each vendor they work with and each logistics-related task. Instead of waiting for payment cycles of two to three times per year, small to medium-sized firms can invest their limited money in technology and processes that support growth.

The existence of an effective supply chain is insufficient. Fintech application to the process promotes progress for all stakeholders involved. It provides a means of addressing urgent problems with the flow of commodities, but it also opens the way to true supply chain business transformation. Marketplaces supported by fintech enable businesses of all sizes to scale and endure over time.

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