Frequently asked questions (FAQ) – General 

The accuracy and timeliness of data is just one of many factors that banks use when deciding whether or not to offer financing, but there is no doubt that banks recognise the legitimacy of data provided to them via the #dltledgers blockchain platform. Our existing customers have reduced their cost of financing by up to 25%, as well as increasing their credit lines by up to 1000% (ten times).

#dltledgers does not require KYC at RFQ stage, but banks will only provide financing to customers with whom they have an agreed credit line. In order to secure financing from a bank with whom they do not already have an agreed credit line, customers will need to complete that bank’s own KYC process. However, by transacting via the dltledgers platform, customers can provide these banks with an added level of assurance.

We do not need all parties on the platform, but we need at least two for this to be worthwhile. The more counterparties, the more advantageous the platform will be. At a minimum we would need you and your own bank (e.g. for digitising your LC request), or you and your counterparty (e.g. for digitising your trade contract). Ideally, we would onboard you, your bank, your counterparty, and their bank. There is no cost to your counterparty or either bank.

Access to supply chain finance has grown significantly in the last decade, sometimes replacing traditional forms of trade finance, like letters of credit and documentary collections. This has happened as improvements in technology have created more supply chain transparency and data, which make it easier for finance providers to assess risk. With more transparency and lower risk, open account trade becomes more feasible, credit lines for traders can increase, and a wider choice of financing options become accessible. This has been compounded by the fact that, alongside banks, other types of supply chain finance and payment solutions have emerged. As a result, treasury teams have greater choice and more bargaining power.

For those who embrace technology, the advantages can be significant: both buyers and sellers can optimise working capital and improve liquidity; buyers can create more robust supply chains by leveraging their access to cheap finance to support key suppliers; increased levels of transparency in first, second, and even third-tiers enable more accurate forecasting and greater predictability; new technologies like blockchain enable integration and seamless data transfer between parties, as well as reducing delays and effort, and increasing the ability to demonstrate provenance and sustainability; and there are indirect benefits, such as the ability to manage foreign exchange risk better, as a result of shortened lead times and lower costs of associated hedging.

Looking to the future there are all kinds of potential opportunities. For example, with increasing digitisation of supply chains and sharing of information, the role of data and analytics will play a much larger part. An organisation’s ability to understand and benefit from trends is going to have a significant impact on its competitiveness. These trends include not only internal data, but also data shared by external parties, and other signals like sentiment, social, economic, and political. All of these factors can help organisations to assess risk and become more accurate in predicting supply and demand. An example of this is a project that is happening here in Singapore, where multiple, otherwise unconnected parties intend to use blockchain to share information about shipping documents and financing requests. Their aim is to spoil the ability of bad actors to secure financing fraudulently, as seen in recent scandals like Agritrade.

Then you have micro-financing. Typically a trader will obtain financing for a whole transaction – end-to-end. As supply chains become increasingly digitised, however, it may be possible to break transactions down into their component parts, and to finance each stage individually. Each element will have a different risk profile, timings, and counterparties, which will open up possibilities for tech-and-data-powered financing, payments, and automation.