Treasury Management Internation Logo

Business Transaction Activity Rises Sharply as Recovery Builds Momentum


After a year of massive supply chain instability and disruptions, new data from Tradeshift’s Index of Global Trade Health points to a significant recovery in global business to business transaction volumes, with quarterly growth rates exceeding pre-pandemic levels by 14%.

Tradeshift’s analysis of digitised invoicing and ordering data suggests a particularly strong end to the year in the US, where the number of transactions between buyers and suppliers jumped 29% in Q4, double the rate of growth seen globally during the period. Trade activity in the Eurozone rose 22% compared to the previous quarter.

The latest data also shows strong order books among buyers in almost every region, suggesting news of a vaccine roll-out in December prompted organisations to press ahead with purchasing decisions which may have previously been delayed or cancelled.

UK recovery is losing ground

While business confidence appears to be improving, Tradeshift data shows that UK trade activity continued to struggle in Q4. Transaction volumes across the region grew just 7% quarter on quarter and remained well below the levels seen before the pandemic. The combination of a significant drop in activity during Q2 and a weak recovery meant that UK trade activity finished the year 36% below the pre Covid level in March 2020.

China leaves the rest of the world trailing

Purchasing and invoicing activity in Western economies has only recently shown signs of returning to growth, but Tradeshift’s data shows businesses in China have been operating at near-normal capacity since April 2020. Cumulative transaction volume growth since Q2 stood at an incredible 118% at the end of 2020 compared to an overall activity shortfall of 3.4% globally during the same period.

“China has significantly outperformed the West by bouncing back quickly,” said Christian Lanng, CEO, Tradeshift. “The consistency we’re seeing in transaction data offers a level of predictability that has yet to return fully in other regions.”

Retail’s roller-coaster end to 2020

Looking at individual sectors at a global level, retail led the way in Q4 reporting transaction growth of 34%. In a roller-coaster year for the sector, transaction activity had dropped by as much 36% in Q2. Technology and manufacturing sectors were up by more than 16% each. The transport and logistics sector, where activity has held relatively steady throughout the pandemic, had more modest gains but still managed a nearly 10% growth in transactions compared to Q3.

“Modern supply chains are built like high-performance vehicles,” said Lanng. “Asking them to navigate the kind of unpredictable environment we saw in 2020 is the equivalent of driving a Formula One car over a series of speed bumps. Conditions are certainly improving, but supply chains are bearing the scars from such a prolonged period of volatility.”

Suppliers facing ongoing liquidity challenges

Lack of supplier liquidity was a key theme throughout 2020, and the most recent data suggests this will remain a significant challenge going into 2021. Invoice payments to suppliers failed to recover at the same pace as order volumes in Q4. The resulting delta is making it very hard for suppliers to manage cashflow.

The crunch on liquidity is made worse by the fact that buyers, keen to preserve their own cash flow, are continuing to extend payment terms. According to a report by Frost & Sullivan, the amount of long overdue invoices (still unpaid after 90 days past their due date), rose to 16% of the total in 2020, up from 10% the previous year.

“Covid exposed an imbalance in the relationship between buyers and suppliers,” said Lanng. “As buyers focus on building resilience to future shocks, we need to consider how best to equip suppliers to come with them on that journey. Technology can help to address this challenge, unlocking faster, more predictable cash flow, better access for diverse suppliers and increased optionality in the event of disruption. What’s good for suppliers, will be good for buyers.”

Most recent episodes

Lessons from Innospec on Building a Strong Cash Culture

Without ready access to the key metrics of cash forecasting, Andrew Hawes (Innospec) knew the business could do little more than react to events. But without the collaboration of key stakeholders too, he knew that...


How to Make Your TMS the Ultimate Investment Tool

The right TMS can be a huge asset to treasury. But these one-stop shops often fall short when it comes to short term investment workflows. In this podcast, Ed Lopez, James Griffin (Calastone), Jeannot Jonas (Carrier...


Best Strategies for Driving Cash Visibility: Advice You Can’t Google

What are the best strategies for facilitating cash visibility, and how can treasurers promote everlasting tech adoption within their departments? Serrala’s Nancy Zhang...


Innovations in Retail Payments

The fallout from the pandemic has radically accelerated changes in consumer behaviour on a global scale. The payments sector has had to quickly adapt in order to keep up with the emerging demands of both digital consumers and retail corporates, resulting in some...


The Future of ESG in Treasury

In this podcast, Melissa Moi, Peter Jameson and Venkat ES from Bank of America join TMI’s Eleanor Hill to determine where the ESG journey is heading next. Our expert panel consider how changing regulation, technology solutions and metrics including ESG KPIs...


HSBC’s Sibos Spotlight: Investing in the Future – from Diversity to Green Deposits

In the final instalment of HSBC’s Sibos Spotlight, Eleanor Hill (TMI) invites Nadine Lagarmitte and Suraj Kalati (HSBC) to consider how corporates’ attitudes to...


HSBC’s Sibos Spotlight: The ESG Landscape – what every treasurer needs to know

In the third edition of HSBC’s Sibos Spotlight Podcast series, TMI’s Eleanor Hill invites Farnam Bidgoli (HSBC) to provide an in-depth overview of the current ESG...


The Path to Transformational Global Cash Visibility

Davina Bradley (CEVA Logistics) and Conor Deegan (CashAnalytics) join TMI’s Eleanor Hill to explore how treasurers can transform their cash visibility and forecasting within their business in a matter of weeks using a...


HSBC’s Sibos Spotlight: Embedding ESG in Trade and Supply Chains

In the second podcast from HSBC’s Sibos Spotlight series, TMI’s Eleanor Hill speaks to Surath Sengupta (HSBC) about embedding ESG into trade and supply chains....


Lost in Transaction: Overcoming Payments Pitfalls

From simple errors to duplicates, fraud and sanctions violations, there are a number of areas where payments can go wrong – especially in the real-time environment. In this podcast, TMI speaks to Andrew Ferrao...