This is done via a technology-driven supply chain financing model. Under the model developed by Tradeshift in collaboration with EKF, banks will be encouraged to offer favourable credit lines to large organisations with export turnover to pay their suppliers earlier. EKF will underwrite these lines of credit.
The Danish initiative is being touted as a cost-efficient alternative to government-backed loans and stimulus packages designed to help ease liquidity pressures placed on businesses because of COVID. The dramatic slowdown in trade over the past two months has seen many larger organisations extend payment terms to suppliers.
By targeting the top 250 large buyers in Denmark, Tradeshift claims that up to USD 55 billion in working capital can be made available to suppliers between in Denmark from June 2020, to June 2021, according to the official press release.
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