A new way for trade to strengthen customer relationship
The first OTC BlockChain Platform to meet Seller and Buyers across Finance Supply Chain
Bank customers are looking for creative new ways to increase responsiveness, visibility, efficiency, cost optimization, liquidity and predictability across their supply chains.
Faced with the complex requirements of their extended supply chains, corporations are looking for help due to the inadequate offer to provide to the organizations the corporate finance function with the timely information it requires.
Letters of Credit and Documentary Collections are the traditional Trade Finance instruments used by sellers to mitigate buyer's risk and obtain financing. While these payment methods will continue to play a role in Trade Finance Buyers and sellers alike find them complicated, time consuming and expensive to use.
To mitigate the situation, buyers and sellers are moving to another form of trading which is faster, easier and less costly: Open Account. This reduces the need for the risk-mitigating buyer features found in traditional Trade Finance products.
In traditional Open Account trading scenarios, sellers ship their goods and send an invoice to the buyer. In turn, the buyer pays the seller's invoice by check or electronic payment. Unlike Letters of Credit and Documentary Collections, trade banks' involvement in this process has been restricted to processing checks and payments, which provides no insight into their customers' supply chains.
Open Account trading currently represents 85 percent of global trade transactions, reducing the role of traditional Trade Finance to about 15 percent. As a result, banks' participation in their customers' trading is steadily declining-confining banks to an ever smaller slice of their customers' overall trade business.
Supply Chain Finance (SCF) is defined “a combination of Trade Financing provided by a financial institution, a third-party vendor, or a corporation itself, and a technology platform that unites trading partners and financial institutions electronically and provides the financing triggers based on the occurrence of one or several supply chain events.”
The overall goal of SCF is to optimize Working Capital throughout the end-to-end supply chain for both buyers and sellers.
Key Elements of Supply Chain Finance Solutions:
(1) Purchase Order / Invoice Data Management
(2) Bank-Assisted Open Accounts – Approval-to-Pay
(3) Open Account Payment
(4) Export / Seller Finance