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News Article

Digital Factoring Solution Could Aid Mexican Exporters

By Pamela Benítez | Thu, 09/30/2021 - 10:50

New York-based Mundi, a financial services platform, launched recently a digital factoring solution that could aid transportation and logistics companies, especially Mexico-based freight forwarders that export to the US, with the capital to initiate operations in a recovering global trade market.  

“We are now at a level three percent above when the pandemic started, and with the United States-Mexico-Canada Agreement in effect, we believe the growth will continue in the coming years,” said Mundi CEO and co-founder, Martin Pustilnick. In addition, revenue from the global trade finance industry is expected to reach US$54 billion in 2022, rising above pre-pandemic levels.

Mundi is a financial services platform and an international factoring solution for Mexican exporters. It was founded in 2020 with the objective to boost trade by creating needed financial tools so companies can be actively participating in the global supply chain with a 100 percent digital application process.  

Their focus is on small to midsize Mexican exporters that ship to the US given that 80 percent of the export market in Mexico is destined to their North American neighbor. Pustilnick believes that there is a un unutilized potential with small and medium-sized enterprise (SME) exporters in the country that require financial support. This is why Mundi developed a factoring tool to give them access to capital with longer payment terms plus other benefits.

The company’s aim with their factoring solution is to reduce risks and inconsistencies in B2B cross-border transactions so their customers can receive the payment immediately without assuming a default risk. Mundi offers ProntoPago for exporters through non-recourse factoring. This type of payment could be critical to companies’ cash flow, especially for SMEs as it allows them to plan for future activities while building stronger customer relationships.

Mundi has a four-step strategy with ProntoPago for exporters. Starting with the closing of a sale and issuing a term invoice to the exporter’s client, to then upload the invoice to Mundi’s system, receiving up to 90 percent advance. The exporter’s client has the option to pay up to 120 days later to a Mundi account, with the exporter receiving the remaining 10 percent minus a minimum transaction cost.

“One of the lessons the COVID-19 pandemic has taught us is that organizations that are the most agile and adapt to the new business environment will survive,” says Paulina Aguilar, Mundi’s Mexico director. “This also influences the way companies to solve liquidity problems, demonstrating that traditional banking is not up to the current necessities of exporters and freight forwarders who are still growing.”

Historically, large banks were the ones funding more than 80 percent of the transactions in the global trade finance, including supply chain, however, since their withdrawal from the sector, mainly due to the 2008 global financial crisis that increased capital requirements, there is a US$1.5 trillion trade finance gap in global supply chains.

Mundi has been challenging a sector historically owned by larger banks by implementing different strategies to the antique ones that did not care for SMEs. For example, through the total digitization of the application process, access to capital with longer payment terms, and the possibility for customers to receive immediate payment. Plus, the fact that Mundi not only considers financial history but account invoicing and export information as well.

The data used in this article was sourced from:  
Mundi, Freightwaves, S&P Global
Photo by:   Felix Haumann, Pexels
Pamela Benítez Pamela Benítez Junior Journalist & Industry Analyst