The SBSN is a payments network built for banks and their small business customers. Following TreviPay’s recent launches of networks for large enterprises and midmarket businesses, the SBSN completes TreviPay’s objective to meet the needs of businesses of all sizes.
As a fully integrated, end-to-end payments network running in parallel with card payments, the SBSN enables banks, as members of the network, to deliver a new white-labeled structured financial service to small business suppliers that sell to business and government entities on invoice payment terms. TreviPay will partner with banks to help small business suppliers offer flexible payment terms to their customers while getting paid virtually real-time and risk-free without incurring debt.
TreviPay’s SBSN allows member banks to expand their current small business product offerings by providing a safe way to tap into the unpenetrated small business business-to-business (B2B) trade credit market, a growth opportunity for small business banking. With SBSN, member banks can customise their solution, define and support their go-to-market strategies, control and manage their risk policies, and set supplier fees. Additionally, by joining the SBSN, banks can launch this new product without capital investments or technology integrations.
According to research commissioned by TreviPay, American small businesses with 100 or fewer employees extend approximately USD 5 trillion in B2B trade credit to their business and government customers every year when allowing them to pay on invoice terms. Extending trade credit to business customers is commonplace and often considered necessary to remain competitive, attract new or larger customers, and deepen existing relationships, all while building loyalty and driving retention. However, small business suppliers still fund most of the trade credit they extend from their own working capital. This use of their limited cash flow is ultimately an impediment to their growth and resiliency, as mentioned in the official press release.
According to the World Trade Organisation, around 80-90% of world trade relies on trade credit. Ongoing economic impacts of the pandemic have resulted in a spike in the adoption of trade credit, with many B2B merchants and marketplaces offering credit terms to generate more sales. In fact, 43% of businesses reported a third increase in the total value of sales made on credit terms since the onset of the coronavirus pandemic.
Small and medium-sized enterprises (SMEs) account for around 90% of companies and more than half of the jobs worldwide according to the World Bank. It’s often those SMEs that are underserved and lack access to affordable trade finance.
The Asian Development Bank found that SMEs are disproportionately affected by the USD 1.7 trillion trade finance gap – the difference between the number of applications to finance companies’ participation in international operations and the number of approvals. SMEs account for 40% of such rejections, much higher than their share of applications.
Therefore, new technologies should revolutionise trade, and especially the trade finance field. Through the digitalisation, the infrastructure now exists to enable end-to-end straight-through-processing of hundreds of thousands of instruments in a low-cost way.
Moreover, collaboration between asset managers and the developers of these new technologies is crucial for the innovation to persist.
As the global trade finance market size is projected to reach USD 11.6 trillion by 2028, from USD 8 trillion in 2021, it is clear that trade credit may be a key tool for B2B commerce.
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