Market forces, including the relative strength of purchasers compared with their supplier trading partners, are changing the face of trade financing. Open-account transactions, in which payment is made after delivery of goods or services with no prior guarantee, continue to grow in acceptance, putting suppliers at risk for non-payment. Canadian and U.S. middle-market companies are using open-account transactions extensively without the help of banks. While Aite Group has found that many of these companies do not perceive bank support as important to the acceptance of open-account transactions, proper support from banks could lead these companies to rely more heavily on bank offerings.
"Bank support for open-account transactions is far from guaranteed," says Nancy Atkinson, senior analyst with Aite Group and author of this report. "To succeed with open-account transaction services, banks must prepare to build out their information technology infrastructure and adopt new standards and protocol. Banks need to identify key vendor partners and other players so the whole assemblage can be greater than the combination of the individual parts. Banks' role in open-account transactions can grow exponentially as they leverage the payments, financing and cash management information they already possess."