In times of uncertaint The rapid spread of the coronavirus (COVID-19) has affected businesses and disrupted supply chains all over the world, with both domestic and international trade inhibited as a result. In response to the volatile environment for buying and selling goods, companies may seek to find safer structures for conducting trade. Patrik Zekkar, Global Head of Trade Finance & Working Capital Management at Nordea, says: “The uncertainty caused by COVID-19 was first felt in Europe as a supply shortage, with manufacturers in the supply chain facing multiple challenges to maintain their regular levels of production. This then moved over to also become a demand shortage within and between various national markets due to the sudden fall in consumer spending and business to business demand in multiple industries.” “There is of course widespread uncertainty regarding how companies in different industries and geographies will be affected by this downturn, in particular as it is unclear how long it will take for things to return to a level of normality. At Nordea, we experience many questions from our customers regarding the current situation in Spain, Italy or France, for example, and what we expect the outlook to be. Some customers may have suppliers in Italy or a big market for selling their goods in Spain. They are obviously concerned about what will happen and whether they will be able to conduct trade and also be able to pay for that trade,” continues Patrik Zekkar. Finding ways of maintaining liquidity in the light of reduced cash flows and minimising trade risks are essential steps in ensuring businesses can maintain stability during challenging times. As the uncertainty caused by the impact of the coronavirus on trade continues, increased risks may make it more difficult for companies to find alternative funding. Patrik Zekkar adds: “Undoubtedly, even after we have come through this period of uncertainty, there will be changes in the way many companies operate. Any deteriorations in credit will be material and hit companies in their borrowing costs as banks and lenders seek increased protection. There will also be a request from companies for more safe structures to trade within.”
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