Demica, a prominent financial technology company, has provided a comprehensive outlook on the top trends in corporate finance for the year 2024. Amidst the prevailing global uncertainties, such as elevated interest rates and geopolitical instability, the company’s analysis illuminates the emerging trends in asset-backed finance, funding, and the increasing influence of financial technology on the global economy.
It is anticipated that asset-backed finance will undergo substantial growth in 2024, as large corporations continue to seek alternative funding avenues in response to the volatile financial landscape. Economic challenges such as high inflation and energy prices have prompted companies to increasingly explore asset-backed options as a complement to traditional borrowing approaches.
The impending $500 billion refinancing cliff in the latter half of 2024, as reported by Reuters, further reinforces this shift. US corporate debt maturities are projected to total $790 billion in 2024 alone, posing significant challenges for leveraged companies. Receivables and payables financing are expected to become crucial tools to address these issues, providing a more cost-effective alternative to standard cashflow lending.
Furthermore, non-bank financial institutions are forecasted to assume a more prominent role in supporting financing for industries that encounter difficulty in accessing traditional banking services. This trend will be especially critical for companies transitioning away from fossil fuels or towards cleaner energy, as they seek new sources of liquidity to fund their decarbonisation efforts and comply with rigorous regulatory mandates.
The escalating demand for semiconductor chips, propelled by the global proliferation of AI applications, is also poised to impact global supply chains in 2024. This, coupled with initiatives such as Germany’s $22 billion subsidy plan and the US’s investment in semiconductor manufacturing, will result in heightened demand for inventory finance.
In addition, private credit markets are expected to offer innovative financing solutions, bridging the gaps left by traditional banks constrained by risk policies. This surge in alternative financing sources will be indispensable for emerging markets, particularly in the Gulf states and Saudi Arabia, as they strive to diversify their economies and bolster capital inflows.
The year 2024 will also witness corporate treasurers placing renewed emphasis on financial hygiene, concentrating on credit and collections management to navigate uncertain market conditions and political volatility. The discipline instilled by supply chain finance programmes will prove highly valuable in maintaining financial discipline and optimising liquidity.
Maurice Benisty, Chief Commercial Officer of Demica, has emphasised the necessity for corporations to embrace flexible and innovative financing methods, as well as the significance of agility and strategic foresight in financial management.
In conclusion, the trends delineated by Demica for corporate finance in 2024 offer valuable insights for companies and treasurers to navigate the challenges and opportunities presented by the rapidly evolving global economic landscape. It is evident that the approaching year will necessitate companies to adapt and explore new avenues for sustainable growth and resilience as they diversify their funding sources.
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