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According to the World Bank, access to financing is one of the biggest barriers to business growth for small and medium-sized enterprises (SMEs).The global trade finance gap is estimated to have grown to $1.7 trillion in 2020 compared to $1.5 trillion in 2018, partly due to the COVID-19 pandemic.
Fintech startups see this gap as a business opportunity. These include Modifi, a digital trade finance platform for commercial payments and trade management software. Ankit Goel, senior vice president of global customers at Modifi, said it helps small and medium-sized businesses pay sellers immediately, while giving them the option to pay later.
“It is difficult for SMEs to open a line of credit, but must pay suppliers quickly, and if payment is not made immediately, this can leave SMEs cash-strapped after the goods are delivered. This is where fintechs and cross-border trade management platforms like Modifi come into play. place,” he said.
Modifi claims to serve thousands of exporters and importers in over 40 countries. It is headquartered in Berlin but has offices in the US, UAE, India, Bangladesh and China.
“The company has grown fourfold year-on-year and recently launched our eight existing markets in Pakistan and the UK,” UAE-based Goel added.
meet urgent needs
There seems to be a lot of demand for Modifi’s services. In India alone, for example, the startup’s business has grown by more than 2,100% in the past two years. In January, it announced the acquisition of the UK-based Seawise Capital’s trade finance and SaaS India business improves Indian SMEs’ access to global trade.
In the Middle East, the company is focused on building partnerships to expand its market share. May, DP World Partnering with Modifi to use its Cargoes Finance fintech platform to provide working capital to the UAE logistics giant’s SME clients.Last month, Modifi partnered with B2B MENA marketplace Trade, which offers buyers preferential payment terms of 30, 60 or 90 days, while enabling them to pay suppliers in advance.
Modifi’s latest market valuation was estimated at over $120 million, which was established in the context of a $24 million Series B round in September 2021. In December, the company announced further $145 million in debt financing.
“We offer trade finance and other export solutions to SMEs at low cost,” Goel explained. “With access to a large number of data sources, we have a better understanding of SME risks, so we can not only review and confirm the legitimacy of the buyer, but also ensure that invoices are paid even if the buyer goes bankrupt. This eliminates the frequent blocking of The credit risk of sellers offering buyers more favorable contract terms.”
Elaborating on how startups can manage the risks involved in paying sellers when buyers have not paid for what they offer, he explained: “Modifi enables its customers to allow [its] The customer’s usual payment time, while the invoice amount is immediately available in cash when the customer’s receivables are purchased and prepaid to the customer. Modifi insures customers against the risk of non-receivable receivables through trade credit insurance. Additionally, it holds some of the invoice amount as collateral to hedge against credit risk. “
ambitious goals
The company is now working to further boost confidence in SMEs by providing transparency on trade flows.
In June, Modifi launched a free shipment tracking tool so any business can track and manage shipments on a single platform. “The shipment tracking tool is the first of many trade services as we roll out more software solutions to help our users optimize their supply chains,” Goel said.
The company hopes to maintain its excellent growth rate while continuing to expand into new markets. “All in all, we’re still in the early stages of the game. Our services are in high demand and our market is large. Even a 1% market share in global commerce could be equivalent to processing $200 billion worth of trade through Modifi … that’s our long-term goal.”
(Reporting by Keith J. Fernandez; Editing by Seban Scaria)
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