Trade finance is the lifeblood of global commerce, underpinning the movement of goods and services across borders. Yet, as 2025 draws to a close, questions linger about the resilience and reliability of this sector. 

At the “Does Trade Finance Still Get Paid? ” webinar held on 11th December 2025, Geoffrey Wynne, partner and head of Sullivan’s Trade & Export Finance Group in London and a TTP editorial board member, took stock of the year’s developments, evaluating the challenges that have tested trade finance and exploring the opportunities that lie ahead in 2026.

Zoom in on the “true trade” to see if trade finance gets paid

To know if trade finance gets paid, we first need to understand what trade really means, noted Wynne. The word “trade” often describes a wide range of financial activities, many of which are not connected to real commerce involving physical goods. This ambiguity has significant consequences. 

When financing is extended to transactions that do not involve real trades, such as those based just on receivables or expected future sales, the risk increases significantly. 

Wynne suggested that adopting a narrower, more precise definition of “true trade” could help market participants better assess risks and structure transactions more securely.

According to Wynne, “Trade finance gets paid, but only when it is backed by real, verifiable trade collateral and goods. When financing is detached from the actual physical trade and relies solely on receivables or anticipated future flows, payments become fragile, defaults increase, and the risk to all parties grows significantly.” 

“Clear documentation and ongoing due diligence are essential to ensure that what we are financing truly reflects genuine trade, because without that foundation, the entire structure becomes vulnerable,” he added. This can help reduce risk and restore confidence among lenders, investors, and insurers.

Despite challenges, most trade finance transactions are successful

In 2025, there were several failures in trade finance, including the collapse of companies like First Brands and Silver Sten Baltis. 

Wynne pointed out that these failures revealed deeper problems, especially in non-bank trade finance, as opaque transaction structures and off-balance-sheet debt can hide real risks.

Other issues included fraud, double invoicing, and financing of non-existent goods. These problems were made worse by weak governance and insufficient due diligence. Volume-driven receivables financing models, which prioritise rapid growth and yield over thorough verification, were especially vulnerable.

Wynne highlighted the dangers of complex, multi-layered financing chains involving numerous intermediaries. These structures may reduce liability, but do not remove credit risk. Instead, they often obscure it, making it harder to detect and manage.

Despite challenges, the majority of trade finance transactions perform as intended and are repaid. 

He advised keeping financing arrangements simple and closely tied to actual trade flows. While structured transactions can be useful, they must be clearly documented and understood in terms of the risks involved. Labelling transactions as supply chain finance when they don’t meet the criteria causes confusion and increases risk.

Digital innovation is enhancing transparency and efficiency

Digital solutions in trade finance are on the rise, with the increasing use of electronic bills of lading, blockchain platforms, and electronic transferable records. Legislation, including the Electronic Trade Documents Act (ETDA) and the Model Law on Electronic Transferable Records (MLETR), offers legal certainty for digital trade documents.

ETDA is a national law adopted by countries such as the UK that recognises electronic trade documents, including electronic bills of lading or invoices, as legally equivalent to their paper counterparts. Similarly, MLETR, developed by the United Nations Commission on International Trade Law (UNCITRAL), provides a model legal framework to standardise the treatment of electronic transferable records under the law. They help businesses to use digital records with confidence that they will hold up in courts and regulatory processes, reducing reliance on physical paperwork and speeding up transactions.

The webinar highlighted the benefits of digitalisation, like faster settlements, reduced fraud risk, and lower costs, but technology alone is not a panacea. The real benefit comes from how these digital tools fit into current processes and if they can expand the market or merely accelerate existing transactions.

Regulatory hurdles and inconsistent adoption across jurisdictions risk stifling innovation, leaving banks and other financial institutions struggling to keep pace with technological advancements. For instance, the slow rollout of enabling laws like MLETR in many countries continues to be a significant barrier to scaling digital trade finance solutions globally.

Wynne quoted that “Digitalisation is part of the solution, not the entire answer. Its success depends on integration, transparency, and regulatory support to avoid stifling innovation.”

Strengthening trade finance in 2026

Interest from institutional investors in trade finance is growing, especially in receivables and trade loans. Some initiatives in this field include the Trade Finance Distribution Initiative (TFD Initiative) and the Trade Finance Conference of Parties (TF COP). TFD Initiative drives efforts to establish trade finance as an investable asset class by promoting automation, transparency, and standardisation in trade asset distribution. In a similar line, the TF COP unites development banks, central banks, and financial institutions to close the global trade finance gap, with a strong focus on SMEs and ESG integration.

However, it’s important to recognise the risks involved, including credit risk, operational risk, and fraud risk. Given the short-term nature of these assets, risk assessments and high transaction volumes are required to prevent exposure to defective deals.

The webinar also talked about ESG considerations in the sector across diverse markets, advocating for tailored approaches that reflect the realities of emerging economies.

Wynne suggested that aligning trade finance products with relevant ESG criteria, such as fair labour practices, community impact, and transparent governance structures, based on the demand of the market, could unlock new opportunities, particularly for SMEs.

Wynne concluded the webinar by stating that trade finance’s future depends on maintaining underwriting discipline while embracing innovation. For building a market that can support global trade sustainably, collaboration is the key.