Fix the Leaky Pipe, Not the Whole House

Digital trade finance doesn’t need revolution; it needs functioning rails, fair credit, and affordable tools that actually get SMEs paid.

SMEs don’t wake up craving “digitalisation” They wake up asking three questions: Can we sell this order? Will we get paid? And how do we fund the gap without setting fire to margin?

If a tool helps with those three, it’s useful. If it doesn’t, it’s theatre with better UX.

Let’s step back from the buzzwords and look at what’s actually changing, and how legal reform, low-cost AI, and a few practical innovators might finally start making trade behave.

What’s changed, and what hasn’t

Open account has eaten the world. Letters of credit still matter, but most cross-border commerce now runs on ship, invoice, and settle terms. Payment infrastructure has sprinted ahead: card and account-to-account rails can move money faster and with richer data than ever.

That’s good for cash flow, but the $2.5 trillion trade-finance gap hasn’t shrunk. Risk appetite and credit data, not technology, keep many SMEs out in the cold. The faster money moves, the quicker small errors or disputes come to light, and that’s where digital tools can either help or harm.

Three rails, not one platform

Think of modern trade as three rails that must align:

1. Legal rails. In the UK, the Electronic Trade Documents Act (ETDA) gives digital bills of lading, bills of exchange, and promissory notes the same legal weight as paper. A financier can now hold and fund a digital instrument it can legally “possess.”

2. Data rails. Common standards, ICC rules, URDTT, make documents machine-readable and consistent, ending the swivel-chair era of re-keyed data.

3. Money rails. Modern payment networks such as Mastercard Cross-Border Services or Worldpay’s acquiring rails don’t finance trade; they complete it. Once a verified digital document confirms delivery or approval under laws like ETDA or MLETR, those rails can move funds instantly, replacing back-office lag with real-time settlement.

The quiet heroes: sound law and small tools

We can talk about “digital possession” with a straight face thanks to Professor Sarah Green, whose work at the Law Commission underpinned the ETDA. She and others solved an old legal puzzle: how to treat an intangible document as a tangible asset. That single fix means smaller exporters can issue and transfer electronic instruments that lenders and courts will actually recognise. It’s not headline-grabbing, but it’s the hinge on which progress turns.

The other quiet hero is the very in-your-face AI assistant. A £20-a-month tool, ChatGPT or any of its cousins can read, extract, and compare trade documents faster than a human. Used properly, behind data controls and with a person in the loop, it catches errors early and kills the petty frictions that block payments. Is it that easy? I think it is.

AI doesn’t do trade finance; it just stops it being delayed by nonsense.

Proofs of life, not product plugs

We’re now seeing practical pilots rather than PowerPoints. In one recent cross-border deal, a digital bill of exchange and an electronic bill of lading were issued and financed entirely online, and accepted by both bank and buyer without a single paper document in 4 hours. In another, a central European bank financed a shipment using a legally valid electronic promissory note, cutting settlement time from several days to a few hours. These aren’t experiments in a lab; they demonstrate that when legal validity meets open standards, digital trade is effective.

For SMEs, that’s the difference between waiting on couriers and getting paid in days.

Forward thinking, with both feet on the ground

The next phase isn’t revolution; it’s coordination. A few pragmatic shifts could change everything:

Event-to-pay. Link milestones (inspection passed, goods delivered) to automatic payment triggers. The legal rail confirms the event; the money rail executes it.

Finance the instrument, not the email chain. Electronic bills of exchange or promissory notes can now be endorsed and discounted without a paper chase, real working-capital oxygen for smaller exporters.

AI as checker, not decider. Machines highlight missing certs and mismatched currencies; humans still decide.

Interoperability before integration. If a system can’t output ICC-aligned data or ISO 20022 messages, it’s a cul-de-sac.

For a mid-sized exporter in Manchester or Nairobi, the breakthrough isn’t blockchain, it’s being paid in thirty days instead of ninety.

A compact SME playbook

Digitise one trade lane end-to-end. Measure Days Sales Outstanding (DSO) and dispute rates before and after.

- Adopt one enforceable e-instrument where law allows, and test discounting it.

- Define two clear payment triggers everyone agrees on.

- Run every file set through a low-cost, ring-fenced AI pre-check.

- Involve your funder early. If they won’t accept the output, you’re digitalise for sport.

The real takeaway

Trade doesn’t need another platform; it needs its plumbing fixed. Good law gives documents legal weight. Standards give them portability. Modern rails move the money. Cheap AI clears the gravel off the runway.

When those three rails finally run in parallel, there’s no excuse left for leaving SMEs outside the system.

Digital trade finance won’t save the world but if it saves a week of admin and a few hundred quid in courier fees, that’s progress worth banking.

“The real revolution isn’t digital paperwork; it’s money arriving when it’s supposed to.”

Author: Kevin Dowling, Senior Director, Global CDD Operations at Worldpay.
Kevin has over 20 years’ experience designing and leading trade-finance, financial-crime and CDD compliance frameworks across banks, fintechs and global payment institutions. His work focuses on building practical operating models that connect regulation, risk and real-world trade.

The views expressed are the author’s own.