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What Are the Different Types of Trade Finance Software?

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  • Written By: Geri Terzo
  • Edited By: A. Joseph
  • Last Modified Date: 11 September 2016
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Trade finance is an international business venture, and implementing the most efficient software solution can reduce the manpower and other resources needed as well as streamline the trade process. There are comprehensive programs designed for financial institutions as well as importers and exporters involved in the trade. Solutions also can be purchased individually as businesses grow and requirements evolve. Automated systems that allow industry participants to track import and export activity are another type of trade finance software.

There are different market participants involved with trade finance, and software solutions can be designed for any one of these parties. It's possible that the same developer creates products for the financial institutions that provide the financing in trade finance as well as for the importing and exporting corporations involved in the process. Given that the industry is global, there are often international versions of trade finance software solutions that are relevant for the standards of certain countries.

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Market participants should expect trade finance software products to remain current with the most recent technological trends, including automation. Certain costs associated with trade finance are enforced at different stages of the process. Subsequently, highly automated solutions are able to respond to these various steps in the import-and-export process. Also, a type of trade finance software might have the ability to track trade activity in real time, which can improve the overall efficiency of importing and exporting goods. Real-time products might also increase the accountability for any of the participants in this business.

Regulation is a major component in the trade process, given the international nature of the industry. Trade finance software might be designed to respond to certain rules that exist in different places. Clearly, the most appropriate solution is built to handle and recognize any oversights or violations of the rules of the particular countries involved in trade finance.

On the financial side, where an investment bank might provide a letter of credit on behalf of importers to facilitate the process of international trade, it is challenging to find automated systems. Reasons for this include a need for human involvement in making judgment calls as well as the extensive amount of paperwork that is inherent in bank financing. Automated solutions might still be found and can be used for many of the components of the financing steps, including application processing for loans. Software solutions for banks might be designed to support the risk management process in extending credit to clients.

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