SAN FRANCISCO – Global business to business transactions dropped by 62 percent in the week of March 8, 2020 according to the latest data from Tradeshift.
Analysis across the Tradeshift platform, which handles trade transactions between over 1.5 million businesses in 190 countries, found cross-border transactions between businesses have fallen by 58 percent week on week, while domestic transactions have dropped 66 percent during the same period.
The findings mirror the pattern observed in China during the height of the outbreak across the region. Tradeshift’s data analytics team found cross border and domestic trade activity in China fell by 56 percent in the week commencing February 16th.
The scale of the slowdown is having a significant impact on liquidity, with an increasing number of large organizations saying they are looking at ways to build or maintain cash reserves.
“Every conversation I’m having with businesses right now centres on cash flow,” said Christian Lanng, Tradeshift CEO.
“Companies are looking at how they can keep cash on their books to see them through the current period. But they’re also acutely aware that suppliers are facing the same liquidity challenges. If cash dries up across the supply chain, we could see a lot of smaller businesses start to fold. It’s a balancing act. Get it wrong and the whole house of cards could come down.
“Large organizations I’m talking to recognize the importance of keeping supply chains solvent right now. Governments have been proactive in introducing measures to try to ease the pressure. But we can’t afford to leave any stone unturned. There is $1.5 trillion in liquidity sitting trapped and doing nothing in accounts receivable as a result of archaic payment practices and the digital disconnect between large business buyers and their suppliers. If ever there was a time to take a serious look at how we unlock that capital and make it accessible to every business across the supply chain, it is now.”