Trade credit becomes tight in post Covid-19 era

As thousands of businesses return to work after the government-imposed lockdown to contain the pandemic, the issue of unpaid invoices has become a main worry for small to medium sized enterprises (SMEs) lacking access to bank financing.

The friction between sellers and buyers is expected to increase over unpaid invoices and most likely this will force many suppliers to stop offering credit terms to their buyers or demand prepayment and shorter repayment periods.

After nearly two months of lockdown, many buyers are facing an acute liquidity squeeze and are not in a position to pay outstanding invoices simply because they don’t have the revenue and their cash flow has turned negative, said Shavasb Bohdjalian, Director of Eurivex Trade Finance Limited (“ETFL”) the alternative funding solutions provider.

ETFL is offering fast and flexible solutions, allowing SMEs to unlock their unpaid invoices and secure immediate cash, while at the same time allowing buyers the credit period that they are comfortable with to pay their obligations, said Athos Kyranides, Consultant for Trade Finance at ETFL.

The ETFL offering allows suppliers to continue to offer credit terms to their buyers and through assignment of the credit invoice to ETFL, receive 85% immediate cash and the remaining 15%, less the agreed charges after the invoice is settled on maturity.

“Buyers get the opportunity to settle supplier trade invoices issued on credit for as long as 120 days” said Kyranides, especially if they can be credit insured by Euler Hermes, the global credit insurer.

Flexible and fast

Speed is critical as solutions are required yesterday and no business has the luxury of waiting for either the government to provide guaranteed loans or risk becoming hostage to bank compliance and long delays.

SMEs need funding now which is why one of the best ways to secure funding is to resort to invoice discounting of the whole ledger or selectively assign the invoices of specific companies for immediate funding.

Companies only need to supply their latest audited financial statements and management accounts as well as debtors ageing for the initial evaluation after which a funding offer is made to them with clearly defined terms and conditions including transparent and very competitive pricing.

Invoice protection

Eurivex Trade Finance Limited ( also provides invoice protection to reduce the risk of customer default through credit insurance and its arrangement with Euler Hermes, which provides coverage in Cyprus, Greece and more than 50 countries.

The majority of SMEs have huge exposure to potential bankruptcies of their customers who have piled up debt prior to Covid-19 pandemic and are now unable to pay their obligations or will potentially be asking for easier credit terms.

The likely relapse of the Covid-19 pandemic in autumn raises a need for financing contingency plans not only for SMEs but for all companies.  Such a relapse could have a catastrophic impact on businesses and the economy hence businesses must be prudent enough to secure extra funding early enough.

The cost of securing such immediate liquidity is negligible when considering that it can save a business without putting additional pressure on the owners.