The platform empowering MSMEs in cross-border trade

Small and medium-sized Indian exporters face numerous challenges in expanding their trade globally, from accessing affordable working capital to meeting the lengthy credit periods demanded by large buyers and navigating complex documentation requirements. These barriers can be discouraging and limit their ability to compete in the global market. However, the Vayana TradeXchange (VTX), an International Trade Financing Services (ITFS) platform, regulated by IFSCA* (International Financial Services Authority), provides a feasible solution addressing these challenges, enabling MSME exporters to compete and thrive in the global market.

Let’s look at the three major challenges faced by MSMEs and how VTX addresses them.

1. Greater choice of affordable trade credit

VTX facilitates MSME exporters to access a spectrum of financiers, increasing their chances of finding affordable financing that meets their needs. The unique feature of an auction-based dynamic rate discovery mechanism helps exporters get the best possible financing rates from multiple financiers worldwide, in a currency of their choice, with a click of a button. Additionally, the VTX platform connects the exporters directly with the financiers avoiding the intermediaries, resulting in reduced costs for the exporters. VTX uses the technology to automate and streamline the application and approval process, resulting in easier and faster financing for the exporter.

Let’s understand this with a hypothetical example An Indian exporter, Mita Private Limited, sells rubber goods to a buyer, Sayang Company, in Southeast Asia. It operated on a 90- day open account credit and the invoice is raised in Singaporean Dollars (SGD). Here, Mita Pvt. Ltd. can use VTX find the best possible pricing for credit in the currency of their invoice (SGD). With the bidding being transparent, they go through the many rates of financiers across the globe, eventually choosing Borough Financier UK. Here, VTX also supports the financier by enablinges them to more easily assess the performance of the exporter, view their payment history , and come up with an appropriate pricing policy, ultimately workings in favour of both participants.

2. Mitigating financiers’ risk through transparency

When lending, it’s always the financier’s priority to mitigate risk and avoid losses. To this effect, VTX facilitates the financier by granting greater visibility on the financial standing of the exporter, their counterparty’s creditworthiness, and information about their trade transactions (a critical input in deriving credit exposure).

Going back to the example of Mita Pvt. Ltd, VTX provides Borough Financier UK with verified trade documents between the exporter and importer. The process of trade document verification is continuous and done in near real- time, even after the transaction is financed, thus also supporting credit monitoring activities. The platform shares alerts with the financier when irregularities are detected, enabling the financier to take swift action against potential losses

3. Business-friendly documentation

VTX provides a simplified and centralized platform for all trade finance documentation, making it easier and consistent for all participants to access and share necessary documents. Automation of critical tasks by the platform, such as document verification and authentication, can significantly reduce the time and effort required to process the documents, freeing up time for more productive activities for participants.

Continuing to our previous example, VTX, a user-friendly platform with intuitive capabilities allows Mita Pvt. Ltd to upload all necessary trade documents securely and Borough Financier UK can then review, bid, and finance the transaction digitally, without the need for physical copies of trade documents. This streamlined process simplified through the user interface makes it easier for all the stakeholders to track the status of the trade finance transaction, reducing administrative overheads and saving valuable time.

Vayana TradeXchange (VTX) is a transformative platform that empowers MSME exporters in India to compete and succeed in the global market. By leveraging technology, VTX has the potential to drive economic growth by providing the necessary tools and resources for MSME exporters to expand their businesses globally. VTX is well-placed to propel the country’s vision of becoming a stronger economic powerhouse.

*The unified regulator set up under IFSCA Act 2019 by the Government of India.