{"id":5809,"date":"2022-05-30T18:28:37","date_gmt":"2022-05-30T17:28:37","guid":{"rendered":"https:\/\/www.alvantia.com\/?p=5809"},"modified":"2022-06-01T12:34:00","modified_gmt":"2022-06-01T11:34:00","slug":"confirming-the-alchemy-of-continuous-change","status":"publish","type":"post","link":"https:\/\/www.alvantia.com\/en\/confirming-the-alchemy-of-continuous-change\/","title":{"rendered":"Confirming: the alchemy of continuous change"},"content":{"rendered":"

From the Atacama Desert to the Amazon rainforest and from the high peaks of the Andes to the Great San Julian Depression, Latin America is so vast, so diverse and such a fascinating place that
\nit would be impossible to define it in words. It\u2019s a land that has given rise to ancient civilizations
\nand modern metropolises, natural wonders and feats of engineering, and great thinkers, artis<\/span>ts and writers. One of those writers, the famous Brazilian author Paolo Coelho, wrote a story called
\nthe Alchemist about a young Spanish shepherd boy, Santiago who sets out on a journey of
\ndiscovery and opportunity. In this article, as a Spaniard, I would like to take you, the reader, on
\na journey to discover opportunities in the Trade Finance Sector in Latin America<\/strong>.
\n<\/span><\/p>\n

Supply Chain Finance, Reverse Factoring, Confirming<\/strong> or whichever other term we choose to use,
\nrefers to a supplier payment and financing management service which changes the way we
\nunderstand access to financing, especially for the Small and Medium sized Enterprise, as well as
\nthe way that parameters and payment conditions are negotiated between buyers and sellers.
\nConfirming has become such a hot topic of late that it will be difficult to come up with something
\noriginal that has not already been considered, discussed or analyzed. Furthermore, given that
\nthere are as many different Confirming scenarios in Latin America as there are countries<\/strong> it is not
\neasy to generalize. We can, however analyze and assess certain common shared factors which
\nhave arisen as constant evolution makes commercial financing systems simpler, more agile and
\nmore efficient, reducing operational risk in the process.<\/span><\/p>\n

Brazil and Chile, the innovators and trend setters, Mexico, Colombia, Peru, Uruguay, Panama,
\nEcuador, Costa Rica,… indeed all the Latin American countries, are experiencing a new reality in<\/strong>
\nthe field of Trade financing<\/strong> and each country has taken its own position and approach: a few
\ncountries have more generalized and regulated systems, some have more advanced
\nimplementations and processes, while others are only just getting started. Nevertheless, all of
\nthem in one way or another, are undergoing a gradual and constant transformation process as
\nthe Commercial Financing industry itself changes. What may seem like small adjustments today,<\/strong>
\nwill over time be seen as the beginnings of a 180-degree industry flip<\/strong>.<\/span><\/p>\n

One especially noteworthy development is the widespread implementation of electronic<\/strong>
\ninvoicing<\/strong>. This is happening to a greater or lesser extent depending on each country\u2019s current
\nlevel of obligation and regulation but is undoubtedly a natural process management evolution<\/strong>
\nthat all economies will end up going through<\/strong>. In addition, certain countries are becoming
\nreferences for others in the implementation of centralized invoice repositories, those
\ncompulsory centralized systems for invoice storage, exchange and management. These systems,
\nbacked by the state, encourage ways of working which provide security and robustness. They
\nallow financial operators, particularly, to develop safe and agile operating processes and
\nprotocols which they can confidently use to implement their financing products.<\/span><\/p>\n

As Latin America embarks on its Confirming journey, it doesn\u2019t have to go it alone. Although
\neach country will be on its own unique path and blaze new trails, it can lean on the countries
\nclose by and further afield who have been or are going through similar experiences. It also has
\nin Spain<\/strong> a country with which it can share and contrast experiences in a similar language. It has<\/strong>
\nbeen 30 years since Confirming came to light<\/strong>, and it would be remiss of us not to highlight certain
\nparallels with the evolution that is taking place and will take place in LATAM. In terms of
\ninnovation, improvements and market adaptations, 30 years is an eternity, especially at a time
\nwhere advancements in technological tools, improvements in communications and the
\napplication of best practices have all happened at dizzying speed. The pace of change in the
\nfuture will be even faster, timelines will shorten, and there may be differences and distinct
\nphases. Nevertheless, reaching a certain level of development and sophistication will take
\ntime.<\/span><\/p>\n

Confirming brings together characteristics and features that can be seen as the cornerstones of
\nbooming working capital financing systems: a high level of automation and digitization, service<\/strong>
\nspeed and agility and, low operational risk in processes and massive information and data<\/strong>
\nprocessing<\/strong>. All of these together provide enough objective proof that this product has
\nconsolidated its place in the Trade Finance world and is here to stay for many years to come.
\nThe market, in constant flux, never ceases to integrate alternatives, improvements and new
\nmodalities. Confirming at the moment, regardless of the country, the scenario and the context
\nin which we operate, is not the same as it was 20, 10 or even 5 years ago and it will certainly not
\nbe the same as it is today within the next 3 or 5 years.<\/span><\/p>\n

The Trade Financing industry\u2019s thirst for Confirming in LATAM is unquenchable<\/strong>. Numerous
\ninitiatives and projects have been rolled out in recent years. In some cases, these are projects
\nlinked to solid banking structures, while on other occasions they are projects generated from
\nthe creation of new entities, financial establishments and Fintechs – as defined in accordance
\nwith the standard rules and regulations of each country.<\/span><\/p>\n

The hands-on experience of facing up to difficulties and overcoming challenges in particular
\nsettings, undoubtedly confers an advantage when it comes to proposing equivalent initiatives
\nand solutions in different contexts: similar things should be done “but in other ways”, adapting
\nthem to each environment while also taking advantage of new technologies and current
\ncapabilities. Today, we can tackle problems, take on structures and consider services much
\nfaster, shortening development and implementation times five-fold. However, let us not forget
\nthat people and companies are an integral part of all of this and their habits, thoughts and<\/strong>
\nbehaviors do not change so readily.<\/strong><\/span><\/p>\n

Time may be of the essence but it\u2019s essential to be given time and, changing mindsets by
\ngetting providers used to financing their rights in another way takes time: eliminating all kinds
\nof physical documents, takes time; doing away with the face-to-face intervention of a financial
\nmanager, takes time; understanding that Confirming is a product that must be known, valued
\nand used by the supplier whenever payment condition negotiations are discussed with the client
\nduring the general purchase-sale process, requires time.<\/span><\/p>\n

In short, despite the fact that technological advances allow us to do things at breathtaking speed
\nand we can exchange knowledge in the blink of an eye, we need to consider that even when we
\ncan objectively state that a system is simpler, more efficient and more effective, people still<\/strong>
\nneed time to learn, to adapt and to mold their behavior<\/strong> – and we should dedicate resources
\naccordingly. Any implementation of a new Confirming project in LATAM, requires careful<\/strong>
\nanalysis<\/strong> and a good grasp of the starting reality, the difficulties and barriers that such an
\nimportant change can pose to companies, especially for those Small and Medium Enterprises,
\nwho are the main “users” and recipients of the service. As Coelho wrote, \u201cChange. But start<\/strong>
\nslowly, because direction is more important than speed.\u201d “When we strive to become better than we are, everything around us becomes better too.” (Coelho)<\/strong>
\n<\/span><\/p>\n

In order for the Confirming journey to progress operators might take time to rethink their
\nstrategies and strive to do even better: for some the challenge might be to start taking steps
\ntowards the implementation of simple but robust Confirming solutions and in the process
\nbecome market creators and operating trend setters; for others, seeking to discover new
\nproduct options and values might be the way forward – identifying new features and niches
\nwhich allow them to stand out and differentiate themselves; and some other third parties may
\nbe able to leverage themselves from the shadow of a larger reference to implement basic
\nConfirming developments that will allow them to, at least, carry on offering these solutions to
\ntheir client portfolio.
\n<\/span><\/p>\n

In the story of the Alchemist, Santiago is shown an opportunity and embarks on a journey alone.
\nAlong the way he seeks advice and companionship and thanks to these he is able to grow,
\novercome adversity and find his treasure. Countries, suppliers and clients have before them a
\nmoment of real opportunity to plot a course with Confirming and take advantages of the many
\nbenefits it can bring in an ever expanding and changing Trade Financing market. Perhaps the
\nplayers in LATAM should follow Santiago\u2019s lead and set out with conviction and determination
\nbut also be willing to share experiences or ask for help along the way because “when you want
\nsomething, all the universe conspires in helping you to achieve it.\u201d
\n<\/span><\/p>\n

 <\/p>\n

Article by Roberto Guti\u00e9rrez Bezanilla, Alvantia CEO, published in the World Supply Chain Finance Report 2022<\/a><\/strong><\/h6>\n
<\/div>","protected":false},"excerpt":{"rendered":"

From the Atacama Desert to the Amazon rainforest and from the high peaks of the Andes to the Great San Julian Depression, Latin America is so vast, so diverse and such a fascinating place that it would be impossible to define it in words. It\u2019s a land that has given rise to ancient civilizations and<\/p>\n

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