What is it?
An online trade finance system should always include important functionality in order to be useful to exporters or importers (for Supply Chain Trade Finance).
Here is our guide to what you should demand from your trade finance provider.
Who is an online system for?
A good platform will provide connectivity between:
- Logistics provider
- Local banks (supplier-side)
- Funders (buyer-side)
- Insurers (alongside the funders)
Dashboards should be real-time showing cash, documents, and shipments – carefully built to restrict the views available only to the data that should be shown to the relevant user.
Online applications and compliance
There should be a simple way to ask for limits on new buyers, capturing the required information, and also to manage compliance and on-boarding of suppliers, including the upload of important documents – especially for annual reviews.
Staged payments and credit notes
Trade finance systems, especially when Supply Chain Trade Finance is involved, need to be able to manage payments to suppliers on a staged basis (X% at shipment, Y% at delivery and Z% later) – and to handle offsets, penalties, chargebacks and credit notes within the system for the buyer. See here for the reasons why this is what buyers need if they are going to give approvals to pay suppliers at shipment.
Security is paramount – and two-factor authentication, encryption and user hierarchies in terms of signing authorities must be included.
Upload commercial documents
The ability to upload proforma and then commercial invoices is required – so that trades can be booked pre-shipment and updated as shipment occurs.
Click to sign
Legal documents should be presented within a “click-to-sign” environment – so that printing, signing, scanning and uploading is no longer required.
Upload and integrate shipping documents
Aligning shipping documents with commercial documents is an essential step, else all parties lose track rapidly of the connection between the financial world and the real world – especially when it comes to managing payments to suppliers and compliance.
In Supply Chain Trade Finance, the buyer confirmation is the essential element that makes finance available to suppliers. Putting this online and ensuring that all the information needed is presented – allows the buyer to approve earlier (at shipment) and mitigate the risk of over-paying suppliers.
Automated pricing and close-outs
And any system of staged payments that also handles credit notes has to have comprehensive close-out processes and statements so suppliers know what has happened and can reconcile their positions.
Support for pre-shipment
Inclusion of pre-shipment committed guarantees against compliant documents allows an online Supply Chain Trade Finance system to remove the need for expensive and cumbersome letters of credit.
Purchase order reconciliation
Finally, most buyers need any online environment to allow them to work back to the purchase orders (POs) that they issued – so that invoices can be matched to POs and reconciled into the host ERP environment.
Trade finance and ESG
Increasingly, trade finance facilities and supply chain finance will be linked to compliance with ESG standards in supply chains.
Think this is a dream?
At PrimaDollar, we have an online system that provides real-time information and processing to all the parties involved in trade finance.
Talk to us now (here) about how our digital platform is transforming trade finance for exporters, freight forwarders, shipping lines, banks and multi-national corporates.
How can I find out more?
With a global network and global coverage, talk to us.