Traditional Trade Finance vs. Supply Chain Finance. Analysis of factors influencing client’s choice among Traditional Trade Finance and Supply Chain Finance techniques

      Аннотация: The WTO estimates that 80-90% of the global trade depends on Trade Finance. It’s one of the most complex business fields in the financial sector, which provides finance, payment and risk mitigation for trading partners. Nowadays, as global trade becomes more sophisticated, successfully managing trade and supply chains has never been more critical (HSBC, 2016). In response to new challenges, leading institutions provide parties with Traditional Trade Finance and increasingly popular Supply Chain Finance solutions. Managers at the supplier and buyer companies have to decide whether to utilise intermediaries and which of the techniques to use. Previous research considered that choice between well-known Open account, Cash in advance and Letter of credit. This work expands that choice among 15 existing techniques. The main result is the developed «Trade and Supply Chain Finance choice model» which gives a theoretical framework and practical application for trading partners and bank’s experts to make the optimal choice. An additional result is the classification of Trade Finance from different points of view. Furthermore, this work answers the question why SCF is becoming more popular.

Ключевые слова: Documentary Credit, export, guarantee, Import, International Trade, Letter of Credit, method of payment, Supply Chain Finance, Trade, Trade Finance, Documentary Business, Documentary Collection, Standby, Open account, Cash in advance, Method of Settlement, Cross-border transaction