I. Details of bottlenecks in the management of trade receivables and liabilities before TSU:

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "I. Details of bottlenecks in the management of trade receivables and liabilities before TSU:"

Transcription

1 Standardised confirmation of receivables: TSU a new (bank) solution with plenty of potential By Herbert Broens, Head of Export Department Bayer AG Contact: or The management of trade receivables and liabilities remains a difficult process for any company. It affects firstly delayed payment, secondly financing, thirdly credit management of the receivables, fourthly the costs of operative collection and accounting management and fifthly the optimisation of stock-keeping. A new banking development called the Trade Services Utility (TSU) allows significant improvements in these areas. The introduction of TSU is perfectly timed to coincide with German Chancellor Angela Merkel s slogan for the Cebit computer trade fair in Hanover 2010, Connecting the world. I. Details of bottlenecks in the management of trade receivables and liabilities before TSU: 1. Delayed payment: The supplier does not always receive payment on time. Companies which produce and sell consumer goods for B2B are affected most significantly. The overdue rate for these is often over 15% of the total receivables. A look at published consolidated financial statements shows that such defaults are also a large factor in liquidity planning. For B2C trade, on the other hand, the majority of turnover is made up of cash transactions and the producers of capital goods receive milestone payments even before completion. Up to now, companies have planned receipt of payment from trade transactions on the basis of experience and mathematical models. However, on the one hand, the exact delay in payment is unknown ex-ante, and on the other hand, liquidity planning becomes increasingly more important due to worsened ratings and poor economic prognoses. For corporate groups with a central treasury, this is only possible with good software and plenty of support from the local units. Even then, such a system has limitations, since the payers alter their methods over time. Suppliers attempt to avoid delays in payment using bank products, such as direct debit (Abbuchungsverfahren in Germany), bank debt collection (Inkasso) and letters of credit (Akkreditiv). Since the debtor does not like to reveal his payment history to third parties, and this is necessary for a direct debit, there is no consent for this for many B2B transactions. Bank 1 / 8

2 debt collection and especially letters of credit are also associated with high handling costs. Further measures for the avoidance of delays in payment include the early evaluation of days overdue and verbal or written warnings based on this. Warning measures can begin even before payment becomes overdue in the form of reminders, and end in judicial debt recovery proceedings. The unit responsible for organising this is the business or a collection centre, which can be in-house or an external provider. 2. Financing: In B2B trade, and also sometimes in B2C, the buyers of the goods often receive a contractually agreed payment date. In B2B for consumer goods, this is usually around 30 days for domestic deliveries and around 60 to 90 days for exports. For capital goods, the payment date can be significantly further away. In B2B, the difference between consumer and capital goods is due to the fact that the cash flow revenue from capital goods investments occurs significantly more slowly than for trade transactions or production for short-term use. The agreed payment date is based on this. In principle, the payment date can be freely negotiated between the buyer and seller. In such negotiations, both sides take the financing costs into consideration. There are also variations across regions and sectors, which form the framework for the payment date. As well as the payment date, delay in payment is also a strong influence on the company s credit supply, the company s rating and the interest paid. Additional interest costs become payable when payment is overdue, and are not usually included in cost calculations. The interest costs do not just affect the calculation of profit and loss, but also the company s credit rating. This becomes more important during economic downturns, if a downgrading of the credit rating is threatened and the financing framework is urgently needed for other functions. 3. Credit management of receivables Credit management of receivables can be done in-house or using external hedges. 2 / 8

3 B2B in-house credit management currently occurs via the evaluation of inhouse data, data exchange with credit agencies and payment pools, and finally with credit scoring. Only a small number of cases involve the active cooperation of the debtor. Once the contract is signed, the credit management today receives no information from the debtor until payment. The alternative, the external hedging of B2B receivables against defaulted payment, has changed significantly in recent years. Until around the year 2000, domestic receivables were credit-insured and exports subject to documentary credit from banks. The state export agencies completed the range of security instruments by assuming the risk for countries and the public sector. Around the turn of the millennium, the number of credits fell. The main reason for this was that the relative handling costs for banks and companies had become too high. The costs were justified, due to the manual handling of numerous papers. But improvements in in-house credit management, up-to-date information about the creditworthiness of business partners irrespective of their location, and especially the expansion in credit insurance providers, created good-value alternatives, which the companies use. The picture changed again with the financial crisis of 2007/08. The largest US insurer, AIG, had to be supported by the state and sold foreign branches. The three largest European providers (EulerHermes, Coface and Atradius), which were and continue to be positioned globally, refused credit risks more frequently than before. There were several reasons for this: Firstly, the insurance volume had increased significantly as a result of the expansion and the change in customer behaviour described above (LC to credit insurance). The few global insurance providers, however, were not in a position to deal with the discontinuation of all LC securities, which had previously been divided among many banks. Secondly, the financial crisis very quickly caused credit limits to be allocated much more restrictively. Thirdly, European credit insurers received worse ratings, so that refinancing became more difficult for them. Finally, many new policies were too expensive for the customers. In general, it would also be advantageous for credit management to receive invoice recognition before it becomes due. This would make delayed payment more difficult both psychologically and in terms of argument. The faster payment is received, the lower the danger of default on payment. Secondly, a delay in payment always begs the question of why it has happened. In the case of invoice recognition before payment becomes due, 3 / 8

4 it is even easier to act on the assumption that the debtor has difficulty paying. 4. Costs of operative collection and accounting management The traditional collection procedure and the allocation of incoming payments are largely manual processes. Depending on the number of unfilled posts, one collector can be responsible for 300 or more customers. As well as the staffing costs for these workers, further costs accrue for the allocation of the incoming payments in accounts receivable these may be minimal in the case of direct debit, for example; or be incumbent on outsourcing (lockboxes in the USA, boletos de cobranca in Brazil). Often, not all incoming payments can be allocated by machine a good allocation quota is over 80% - so that the remaining payments have to be processed manually. This can lead to costs of over 50, especially when the cost of the dunning process is added on. 5. Optimisation of stock-keeping At first glance, management of stock seems unconnected to the management of trade receivables and liabilities. Stock managers make decisions based on operational production processes, service agreements or capacity requirements. Corporate planning and optimum order quantities are the deciding factors for them. The implementation of their decisions influences company results, profit margins, working capital results and return on equity. In 2009, Professor Protopappa (European Business School, Dept. Logistic and Finance) found that close cooperation with the working capital department optimised results. Restrictions on each department should be solved across all departments. After all, trade receivables and liabilities only come about when the company s own stocks or those of the customer are kept full. Effective working capital allocation and making receivables and liabilities visible can bring about significant improvements in costs, highlight liquidity developments and reduce borrowings. II. The TSU Approach The banks role as payment processors, risk hedgers and liquidity providers is a special one. The changing requirements of customers cause many institutions to rethink and to realign their range of products and services in accordance with the customer s value chain. Transaction financing is becoming increasingly important, while traditional products (e.g. factoring) are being offered just as much as innovative forms of financing (e.g. supply chain finance). Furthermore, banks see themselves 4 / 8

5 increasingly as service providers, supporting their customers in data acquisition and analysis. International cash management, e-invoicing, the creation of trade documents and their settlement are just a few of the new services offered. For banks, too, the quality of data is of key importance. Alongside the credit standing, it provides the foundation for a successful relationship with the customer. Data acquisition is a particular challenge in international trade. The provision of paper documentation, such as for a credit or documentary collection, has become less important. There are no uniform electronic invoicing formats. Support via SWIFT the Trade Services Utility This is why SWIFT, an internationally-active company owned by banks, brought a new solution onto the market in 2007: Trade Services Utility (TSU). TSU is a notification-based bank-to-bank application which can be used for data exchange and the automatic comparison of purchase order, invoicing, transport documentation and certification data. The prerequisite for this is that the companies provide the relevant information. The format in which this is done depends on the agreement between the bank and customer in each case. TSU merely provides an inter-bank format which makes the exchange of data possible. TSU allows customers to recognise documentary discrepancies early on without individual checks, thus avoiding non-payment and reducing the processing time between delivery and payment. As well as the advantage in terms of time, expensive document creation and auditing processes become unnecessary (see Point 1). This allows banks to enter more strongly into risk assumption for trade credit again (see Point 3). However, many are becoming increasingly convinced that a uniform standard of bank communication is also necessary for customers, since many customers have to exchange TSU data with several banks. Furthermore, real cost avoidance is only achieved if the corporations ERP systems can exchange standardised data without separate programming. With TSU, it is possible to levy a standardised irrevocable declaration of payment obligation: the bank payment obligation (BPO). This BPO becomes due when the financial institution involved has performed a data comparison and accepted any discrepancies. This gives it a similar character to a letter of credit. SWIFT is currently in pre-negotiations with the International Chamber of Commerce in Paris, to obtain an endorsement for the TSU- Bank Payment Obligation. This will increase its usage as an alternative of the LC in future. Before ICC recognition, TSU will have other important functions: 5 / 8

6 Supply chain financing is becoming significantly more important: The tight financing framework for companies led to a new product development in Spain a few years ago: so-called Confirming (what is known globally as supply chain financing), which is currently enjoying an increase in demand in many countries. The idea behind SCF is that the bank credit is based on the future payment of the debtor. This provides relief for the bank s balance-orientated customer financing. This makes additional credit possible for the supplier, and he receives financing with favourable interest rates when the buyer has a better credit rating. The prerequisite is that the buyer/debtor recognises the receivable again after receiving the invoice, regardless of his obligations in the purchase agreement. The bank can then support the SCF with less equity to fulfil Basel 2 and with an appropriately lower interest rate. The advantage of SCF is therefore shared between the bank, the supplier and the debtor. All parties benefit in the form of cash payments or new payment dates. Some banks have set up web portals to support the process of invoice recognition workflows. An interface with an ERP system is being set up for the initiator of SCF, who corresponds with many business partners via the portal of his chosen bank. However, corporate counterparts of SCF continue to manage their little data input manually. This text is only intended to point out the balance-orientated effects and possibilities. The SCF will achieve a real breakthrough when a matching standard is developed. Here, the TSU offers a data set independent of region and sector, which allows corporations to work together with multiple banks. SCF is especially suited to conducting supplier transactions with multiple banks, as long as the costs for manual handling do not exceed the advantages. To do this, the default data set is required. In this, internationally-active trading companies and industrial companies which export must also take many points of contact with external service providers (banks, logistics companies, insurers, authorities ), suppliers and customers into account in the global environment. To do so, production, goods and financial data must be integrated in order to get a complete online status. It is therefore especially important that the banks use the TSU data set uniformly with the customer. Otherwise, TSU will not become accepted by major customers, since the business case does not assume an increasing number of points of contact. In currency management, the TSU insight into the delivery and payment terms of the customers allows the banks to offer active management of currency risks. The TSU data set is even more important for B2B trade outside banking products: 6 / 8

7 Working Capital improvement: By matching trade receivables and liabilities, differences and outstanding payments can be recognised before they are due. Delay in payment is only authorised in exceptional cases. Matching before the due date thus brings significant advantages for interest and liquidity. Suppliers receive payment punctually even without direct debit and cheque payments, which have other implications. Manual work: A large part of the collection expenditure is dispensed with if confirmation is provided, before payment is due, that the customer has received and accepted the invoice and planned this position for his payment. A large proportion of the manual accounting tasks is also dispensed with, since due to the electronic data exchange, the debtor and creditor have a stronger interest in harmonising the data sets in such a way that as little manual input as possible remains on both sides. The advantages of this are for the debtor, to a large extent. The debtor will give his payment confirmation for marketing reasons in some cases. Sometimes he will only be prepared to do so if he is compensated. However, in realistic payment models, this will nevertheless lead to improvements for the debtor and the creditor. Annual accounts: Collecting confirmation from the debtor regarding the existence of the receivable is no longer necessary, since the position has been confirmed by matching. In this, matching is available not only for sample testing, as at present. Deliberate and accidental false representations of the balance are therefore avoided. Optimisation of stock-keeping: Data exchange via TSU starts when the order is made. This allows the supplier to take the demand into account quickly in the production process. TSU is therefore also the beginning of the new definition of order quantities and times, which can have a positive effect on prices. Smaller stocks are good for the environment, after all an increasingly important argument. III. Facts on TSU: To give an idea of TSU, here is a rough data set description for minimum matching: Order number, max. 35 characters, and date of invoice Buyer name, max 70 characters e.g. Global Location Number His address, city, ISO Code for the country Seller name, max 70 characters, e.g. Global Location Number His address, city, ISO Code for the country Product name/description, max 70 characters Payment date, max 40 characters 7 / 8

8 Sale price, ISO Code for currency and max 18 digits for the amount Buyer s bank BIC Seller s bank BIC Good s quantity TSU is already supported by over 100 banks. The leading international banks all use TSU. The task now is to roll out the standard across companies, in order to increase significant values. This article will be published in the September/October 2010 edition of the Business Credit Magazine. 8 / 8

Liquidity management with clockwork precision

Liquidity management with clockwork precision Liquidity management with clockwork precision Cash management and payments Corporate Banking Efficient management of accounts and cash flows Professional management of accounts and cash flows is a key

More information

THE WORKING CAPITAL CYCLE IN INTERNATIONAL TRADE

THE WORKING CAPITAL CYCLE IN INTERNATIONAL TRADE THE WORKING CAPITAL CYCLE IN INTERNATIONAL TRADE Introduction The working capital cycle is the period of time which elapses between the points at which cash is used in the supply/production process, to

More information

Supply Chain Finance for Corporates

Supply Chain Finance for Corporates Supply Chain Finance for Corporates Managing risk, finance and processing efficiency in a multi-bank environment Webinar, 30 June 2011 Our SWIFT speakers today André Casterman Head of Cash, Trade and Supply

More information

SAP FSCM Financial Supply Chain Management Unit 1 FSCM Overview

SAP FSCM Financial Supply Chain Management Unit 1 FSCM Overview SAP FSCM Financial Supply Chain Management Unit 1 FSCM Overview SAP FSCM Overview 1 Course Overview Unit 1.1 SAP Financial Supply Chain Management Unit 1.2 SAP Credit Management Unit 1.3 SAP Biller Direct

More information

LECTURE NO.8 THE ROLE OF GUARANTEES AND BONDS IN INTERNATIONAL TRADE

LECTURE NO.8 THE ROLE OF GUARANTEES AND BONDS IN INTERNATIONAL TRADE LECTURE NO.8 THE ROLE OF GUARANTEES AND BONDS IN INTERNATIONAL TRADE A guarantor issues a guarantee or bond, usually a bank or an insurance company, on behalf of an exporter. It is a guarantee to the buyer

More information

The Working Capital Cycle in International Trade September 2013. Copyright The Institute of Export and International Trade 2013

The Working Capital Cycle in International Trade September 2013. Copyright The Institute of Export and International Trade 2013 The Working Capital Cycle in International Trade September 2013 Copyright The Institute of Export and International Trade 2013 1 Contents Finance During the Business Lifecycle The Working Capital Cycle

More information

Reducing Risk Through Bank-Assisted Open Account

Reducing Risk Through Bank-Assisted Open Account Reducing Risk Through Bank-Assisted Open Account Written by Bottomline Technologies and David Hennah of SWIFT This article was first published by GTNews Despite the recent credit crisis, globalisation

More information

Enhancing Supply Chain Finance with Bank Payment Obligation (BPO)

Enhancing Supply Chain Finance with Bank Payment Obligation (BPO) Enhancing Supply Chain Finance with Bank Payment Obligation (BPO) Peter Chin Sibos 2013 Dubai September 17, 2013 Copyright 2001 2013 Premium Technology, Inc All Rights Reserved BPO Enhancing Open Account

More information

late payment The Late Payment of Commercial Debts (Interest) Act 1998: A User s Guide

late payment The Late Payment of Commercial Debts (Interest) Act 1998: A User s Guide late payment The Late Payment of Commercial Debts (Interest) Act 1998: A User s Guide Index Introduction The importance of prompt payment Legal Warning Section 1: Understanding the legislation What is

More information

By using a documentary credit, an exporter is certain of receiving payment at the agreed time, and of having a source of finance.

By using a documentary credit, an exporter is certain of receiving payment at the agreed time, and of having a source of finance. Documentary Credits Security of settlement through documentary credit With the exporter's interest in optimising security for the payments he is to receive, especially those from the faraway markets, interest

More information

Working capital management 2009 - a survey of Nordic companies

Working capital management 2009 - a survey of Nordic companies Report Working capital management 2009 - a survey of Nordic companies Prepared by Danske Bank and Ernst & Young Introduction The financial crisis and the recession that took speed through the autumn of

More information

Guide to importing and exporting

Guide to importing and exporting Guide to importing and exporting September 2011 Version 41 Table of contents Introduction 4 We have the solutions for your needs...4 Important Information...4 Getting started 5 What do I do first?...5

More information

BANK PAYMENT OBLIGATION: FINANCIAL INSTRUMENTS TO MANAGE RISK IN THE OPEN ACCOUNT TRADE

BANK PAYMENT OBLIGATION: FINANCIAL INSTRUMENTS TO MANAGE RISK IN THE OPEN ACCOUNT TRADE BANK PAYMENT OBLIGATION: FINANCIAL INSTRUMENTS TO MANAGE RISK IN THE OPEN ACCOUNT TRADE J.P. Morgan Michael Quinn, Managing Director, Global Trade Product Management Executive Qatar National Bank Imre

More information

Credit insurance. Protection against non-payment/

Credit insurance. Protection against non-payment/ Credit insurance Protection against non-payment/ Trust is often not enough/ Every unpaid invoice harbors the risk of a financial loss. Things can be fine for a long while, but suddenly your customer is

More information

Paper FFM. Foundations in Financial Management FOUNDATIONS IN ACCOUNTANCY. Pilot Paper. The Association of Chartered Certified Accountants

Paper FFM. Foundations in Financial Management FOUNDATIONS IN ACCOUNTANCY. Pilot Paper. The Association of Chartered Certified Accountants FOUNDATIONS IN ACCOUNTANCY Foundations in Financial Management Pilot Paper Time allowed: 2 hours This paper is divided into two sections: Section A ALL TEN questions are compulsory and MUST be attempted

More information

ICAP GROUP S.A. FINANCIAL RATIOS EXPLANATION

ICAP GROUP S.A. FINANCIAL RATIOS EXPLANATION ICAP GROUP S.A. FINANCIAL RATIOS EXPLANATION OCTOBER 2006 Table of Contents 1. INTRODUCTION... 3 2. FINANCIAL RATIOS FOR COMPANIES (INDUSTRY - COMMERCE - SERVICES) 4 2.1 Profitability Ratios...4 2.2 Viability

More information

LAW ON FOREIGN CURRENCY TRANSACTIONS. ( Official Herald of the Republic of Serbia, Nos. 62/2006 and 31/2011) I GENERAL PROVISIONS

LAW ON FOREIGN CURRENCY TRANSACTIONS. ( Official Herald of the Republic of Serbia, Nos. 62/2006 and 31/2011) I GENERAL PROVISIONS LAW ON FOREIGN CURRENCY TRANSACTIONS ( Official Herald of the Republic of Serbia, Nos. 62/2006 and 31/2011) The present Law shall govern: I GENERAL PROVISIONS Article 1 1) payments, collections and transfers

More information

Want to start or grow your import/export business? Learn how from industry experts. View our training schedule. International Payment Methods

Want to start or grow your import/export business? Learn how from industry experts. View our training schedule. International Payment Methods Want to start or grow your import/export business? Learn how from industry experts. View our training schedule International Payment Methods As the globe is becoming smaller and international trade is

More information

Customer financing in Brazil Guide for a Finnish SME exporter

Customer financing in Brazil Guide for a Finnish SME exporter Customer financing in Brazil Guide for a Finnish SME exporter Contents Financial markets 2 Know your customer 3 Prepayments received from the buyer 4 Granting payment terms with invoice 5 Bills of exchange

More information

Bank Payment Obligation

Bank Payment Obligation Payment Obligation IIBLP - 2012 Singapore Annual LC Survey Conference David Dobbing SWIFT Standards Agenda Introduction How it works Uniform Rules for Payment Obligation Adoption and Case Studies 2 Introduction

More information

ProStix Smartstore Training Manual - Accounts Payable. 2014 Sterland Computing

ProStix Smartstore Training Manual - Accounts Payable. 2014 Sterland Computing ProStix Smartstore Training Manual - Accounts Payable Contents 3 Table of Contents Accounts Payable 4 1 Introduction to... Accounts Payable 4 2 Accounts Payable... Terminology 6 3 PreRequisites... 9 4

More information

Intra-day payment Frequently asked questions

Intra-day payment Frequently asked questions Intra-day payment Frequently asked questions Contents 1. THE MEANING, advantages and scope of intra-day payment... 3 1.1. What does the launch of intra-day payment mean?... 3 1.2. What advantages does

More information

Paper F9. Financial Management. Fundamentals Pilot Paper Skills module. The Association of Chartered Certified Accountants

Paper F9. Financial Management. Fundamentals Pilot Paper Skills module. The Association of Chartered Certified Accountants Fundamentals Pilot Paper Skills module Financial Management Time allowed Reading and planning: Writing: 15 minutes 3 hours ALL FOUR questions are compulsory and MUST be attempted. Do NOT open this paper

More information

RATLOU LOCAL MUNICIPALITY

RATLOU LOCAL MUNICIPALITY RATLOU LOCAL MUNICIPALITY CREDIT CONTROL AND DEBT COLLECTION POLICY Original Council Approval Date of Council Approval Resolution Number Effective Date Amended CONTENTS CREDIT CONTROL AND DEBT COLLECTION

More information

Introduction to the contractual aspects of the BPO

Introduction to the contractual aspects of the BPO Introduction to the contractual aspects of the BPO August 2014 SWIFT s Corporate and Supply Chain team supplychain@swift.com Agenda BPO impacts on contracts Corporate-to-corporate space Corporate-to-bank

More information

Accounts Receivable and Inventory Financing

Accounts Receivable and Inventory Financing Accounts Receivable and Inventory Financing Glossary Accounts Payable - A current liability representing the amount owed by an individual or a business to a creditor for merchandise or services purchased

More information

BEST FORMS OF MONEY TRANSFER AND PAYMENT CONDITIONS

BEST FORMS OF MONEY TRANSFER AND PAYMENT CONDITIONS BEST FORMS OF MONEY TRANSFER AND PAYMENT CONDITIONS BEST FORM FOR MONEY TRANSFER FORMS OF MONEY TRANSFER INTRODUCTION: Sending or receiving money for either payment of salaries, settlement of business

More information

TERMS AND CONDITIONS APPLICABLE TO CREDIT INSTITUTIONS

TERMS AND CONDITIONS APPLICABLE TO CREDIT INSTITUTIONS ERSTE BANK HUNGARY ZRT TERMS AND CONDITIONS APPLICABLE TO CREDIT INSTITUTIONS Effective from: 01 September 2014 1. General Provisions 1.1. These Terms and Conditions (hereinafter TC ) apply to all correspondent

More information

Debt Management (General) Procedure

Debt Management (General) Procedure Debt Management (General) Procedure Policy Code: FN1856 Table of Contents Purpose... 1 Scope... 1 Legislative Context... 1 Definitions... 1 Actions... 2 General Information... 3 Considerations prior to

More information

International Accounting Standard 39 Financial Instruments: Recognition and Measurement

International Accounting Standard 39 Financial Instruments: Recognition and Measurement EC staff consolidated version as of 18 February 2011 FOR INFORMATION PURPOSES ONLY International Accounting Standard 39 Financial Instruments: Recognition and Measurement Objective 1 The objective of this

More information

18 BUSINESS ACCOUNTING STANDARD FINANCIAL ASSETS AND FINANCIAL LIABILITIES I. GENERAL PROVISIONS

18 BUSINESS ACCOUNTING STANDARD FINANCIAL ASSETS AND FINANCIAL LIABILITIES I. GENERAL PROVISIONS APPROVED by Resolution No. 11 of 27 October 2004 of the Standards Board of the Public Establishment the Institute of Accounting of the Republic of Lithuania 18 BUSINESS ACCOUNTING STANDARD FINANCIAL ASSETS

More information

SUPPLY CHAIN FINANCE : A new way for trade banks to strengthen customer relationships

SUPPLY CHAIN FINANCE : A new way for trade banks to strengthen customer relationships White Paper SUPPLY CHAIN FINANCE : A new way for trade banks to strengthen customer relationships Business solutions through information technology TM Entire contents 2007 by CGI Group Inc. All rights

More information

Terms and Techniques to Manage Receivables, Protect Assets and Enhance Working Capital

Terms and Techniques to Manage Receivables, Protect Assets and Enhance Working Capital Terms and Techniques to Manage Receivables, Protect Assets and Enhance Working Capital TERM / TECHNIQUE DEFINITION APPLICATIONS ADVANTAGES DISADVANTAGES Open Account Terms Seller makes shipment and awaits

More information

Financial Instruments: Recognition and Measurement

Financial Instruments: Recognition and Measurement STATUTORY BOARD FINANCIAL REPORTING STANDARD SB-FRS 39 Financial Instruments: Recognition and Measurement This version of the Statutory Board Financial Reporting Standard does not include amendments that

More information

GUIDE TO INTERNATIONAL PAYMENT METHODS. Making international trade accessible to every business

GUIDE TO INTERNATIONAL PAYMENT METHODS. Making international trade accessible to every business GUIDE TO INTERNATIONAL PAYMENT METHODS Making international trade accessible to every business 2 As the globe is becoming smaller and international trade is becoming easily accessible, the issue of moving

More information

Web. Chapter FINANCIAL INSTITUTIONS AND MARKETS

Web. Chapter FINANCIAL INSTITUTIONS AND MARKETS FINANCIAL INSTITUTIONS AND MARKETS T Chapter Summary Chapter Web he Web Chapter provides an overview of the various financial institutions and markets that serve managers of firms and investors who invest

More information

Indian Accounting Standard (Ind AS) 32 Financial Instruments: Presentation

Indian Accounting Standard (Ind AS) 32 Financial Instruments: Presentation Indian Accounting Standard (Ind AS) 32 Financial Instruments: Presentation Contents Paragraphs Objective 2 3 Scope 4 10 Definitions 11 14 Presentation 15 50 Liabilities and equity 15 27 Puttable instruments

More information

RULES ON THE CHART OF ACCOUNTS AND THE CONTENTS OF ACCOUNTS IN THE CHART OF ACCOUNTS FOR BANKS

RULES ON THE CHART OF ACCOUNTS AND THE CONTENTS OF ACCOUNTS IN THE CHART OF ACCOUNTS FOR BANKS Outsourced translation Official Gazette of RS, Nos 98/2007, 57/2008 and 3/2009 Pursuant to Article 15, paragraph 2, item 2 of the Accounting and Auditing Law (Official Gazette of RS, No. 46/2006), the

More information

NOTES TO THE FINANCIAL STATEMENTS AS OF 31 DECEMBER 2006

NOTES TO THE FINANCIAL STATEMENTS AS OF 31 DECEMBER 2006 NOTES TO THE FINANCIAL STATEMENTS AS OF 31 DECEMBER 2006 (Amounts expressed in Euro ) (Translation of a report originally issued in Portuguese Note 49) Operations BNP Factor Companhia Internacional de

More information

Xynergy Commercial Capital LLC

Xynergy Commercial Capital LLC Xynergy Commercial Capital LLC How Can Work For You The Problem Short of cash and must pay suppliers, lease, bills and salaries? No need for stress, get your payments in advance for your invoices and pay

More information

2 This Standard shall be applied by all entities that are investors with joint control of, or significant influence over, an investee.

2 This Standard shall be applied by all entities that are investors with joint control of, or significant influence over, an investee. International Accounting Standard 28 Investments in Associates and Joint Ventures Objective 1 The objective of this Standard is to prescribe the accounting for investments in associates and to set out

More information

Invoice Factoring, Debtors Discounting and Trade Finance are bridging facilities using your debtors, stock or movable assets to raise cash.

Invoice Factoring, Debtors Discounting and Trade Finance are bridging facilities using your debtors, stock or movable assets to raise cash. Dear Sir / Madam, Re Bridging Facilities Invoice Factoring, Debtors Discounting and Trade Finance are bridging facilities using your debtors, stock or movable assets to raise cash. A key element is that

More information

STATEMENT OF CASH FLOWS AND WORKING CAPITAL ANALYSIS

STATEMENT OF CASH FLOWS AND WORKING CAPITAL ANALYSIS C H A P T E R 1 0 STATEMENT OF CASH FLOWS AND WORKING CAPITAL ANALYSIS I N T R O D U C T I O N Historically, profit-oriented businesses have used the accrual basis of accounting in which the income statement,

More information

Indian Accounting Standard (Ind AS) 39 Financial Instruments: Recognition and Measurement

Indian Accounting Standard (Ind AS) 39 Financial Instruments: Recognition and Measurement Indian Accounting Standard (Ind AS) 39 Financial Instruments: Recognition and Measurement Contents Paragraphs Objective 1 Scope 2 7 Definitions 8 9 Embedded derivatives 10 13 Recognition and derecognition

More information

Sri Lanka Accounting Standard-LKAS 7. Statement of Cash Flows

Sri Lanka Accounting Standard-LKAS 7. Statement of Cash Flows Sri Lanka Accounting Standard-LKAS 7 Statement of Cash Flows CONTENTS SRI LANKA ACCOUNTING STANDARD-LKAS 7 STATEMENT OF CASH FLOWS paragraphs OBJECTIVE SCOPE 1 3 BENEFITS OF CASH FLOW INFORMATION 4 5 DEFINITIONS

More information

ISO20022 Trade Services Dashboard Description of business processes. ISO20022 - Trade Services Description of Business Processes

ISO20022 Trade Services Dashboard Description of business processes. ISO20022 - Trade Services Description of Business Processes ISO20022 Trade Services Dashboard Description of business processes 1 Trade Services Description of Procurement: Sub-Functions Tendering Ordering Delivering Invoicing Process for buyer to contact potential

More information

1 CONSOLIDATED FINANCIAL STATEMENTS (1) Consolidated Balance Sheets

1 CONSOLIDATED FINANCIAL STATEMENTS (1) Consolidated Balance Sheets 1 CONSOLIDATED FINANCIAL STATEMENTS (1) Consolidated Balance Sheets As of March 31,2014 As of March 31,2015 Assets Cash and due from banks 478,425 339,266 Call loans and bills bought 23,088 58,740 Monetary

More information

COFACE POLICY ADMINISTRATION GUIDELINES

COFACE POLICY ADMINISTRATION GUIDELINES / COFACE POLICY ADMINISTRATION GUIDELINES Coface guidelines are designed to provide additional information related to your insurance policy in a simplified way. Coface guidelines do not cancel or replace

More information

Guideline on loan classification system

Guideline on loan classification system Appendix 2 Guideline on loan classification system 1. This guideline sets out the loan classification framework adopted by the Hong Kong Monetary Authority ( HKMA ) for monitoring the asset quality and

More information

PROFILE INDEX. Introduction 3. Key Definitions 4. Features & Benefits 5. Standard Operating Procedure 6. Service Process 7. Service Undertaking 8

PROFILE INDEX. Introduction 3. Key Definitions 4. Features & Benefits 5. Standard Operating Procedure 6. Service Process 7. Service Undertaking 8 COMPANY PROFILE PROFILE INDEX Introduction 3 Key Definitions 4 Features & Benefits 5 Standard Operating Procedure 6 Service Process 7 Service Undertaking 8 Contact Details 9 Trade Finance Glossary 10 Page

More information

NAB Foreign Exchange Transactions. Full Participation FX Solutions Products Product Disclosure Statement

NAB Foreign Exchange Transactions. Full Participation FX Solutions Products Product Disclosure Statement NAB Foreign Exchange Transactions Full Participation FX Solutions Products Product Disclosure Statement Effective date of issue 3 September 2012 Important information Issuer and contact details This Product

More information

Investments in Associates and Joint Ventures

Investments in Associates and Joint Ventures STATUTORY BOARD FINANCIAL REPORTING STANDARD SB-FRS 28 Investments in Associates and Joint Ventures This standard applies for annual periods beginning on or after 1 January 2013. Earlier application is

More information

LAW ON FOREIGN EXCHANGE OPERATIONS

LAW ON FOREIGN EXCHANGE OPERATIONS LAW ON FOREIGN EXCHANGE OPERATIONS This Law shall govern: (Consolidated) 1 I. BASIC PROVISIONS Article 1 1) payments, collections and transfers between residents and non-residents in foreign means of payment

More information

1. Definition of cash components

1. Definition of cash components Opinion n 2015-06 of 3 July 2015 relating to Central Government Accounting Standard 10 Cash Components On 3 July 2015 the Public Sector Accounting Standards Council adopted this Opinion relating to Central

More information

Innovative forms of purchase and inventory financing

Innovative forms of purchase and inventory financing Arno Schneider Executive Director WCF Finetrading GmbH, Munich 10 Arno Schneider WCF Finetrading GmbH Innovative forms of purchase and inventory financing Banks lending has become more restrictive, which

More information

MODULE 2 PRICING, FINANCING, PAYMENT METHODS DRAFTED BY: MYCCI BULGARIA

MODULE 2 PRICING, FINANCING, PAYMENT METHODS DRAFTED BY: MYCCI BULGARIA MODULE 2 PRICING, FINANCING, PAYMENT METHODS DRAFTED BY: MYCCI BULGARIA NOVEMBER 2012 Contents PRICING, FINANCING, PAYMENT METHODS...2 INTRODUCTORY NOTES:...2 ABSTRACT:...2 PRICING...3 Price, pricing &

More information

Billing & Payment. Secure and comprehensive: from order to cash.

Billing & Payment. Secure and comprehensive: from order to cash. Billing & Payment Secure and comprehensive: from order to cash. Billing & Payment by Swiss Post Solutions «Generate more sales by offering your customers new ways of paying. Simplify and optimise your

More information

WORKING CAPITAL MANAGEMENT

WORKING CAPITAL MANAGEMENT CHAPTER 9 WORKING CAPITAL MANAGEMENT Working capital is the long term fund required to run the day to day operations of the business. The company starts with cash. It buys raw materials, employs staff

More information

Frequently Asked Questions for Banks

Frequently Asked Questions for Banks Bank Payment Obligation (BPO) Frequently Asked Questions for Banks Prepared by the ICC Banking Commission Summary and highlights As the Bank Payment Obligation (BPO) has been adapted by the ICC Banking

More information

Terms of Business Agreement for Brokers working with Coface branch in the United Kingdom

Terms of Business Agreement for Brokers working with Coface branch in the United Kingdom Terms of Business Agreement for Brokers working with Coface branch in the United Kingdom Contents Page(s) Part 1 OUR RESPONSIBILITIES AND DEALINGS WITH BROKERS 1. Our status 2 2. Our responsibilities 2-3

More information

33 Financial risk management and supplementary disclosures regarding financial instruments

33 Financial risk management and supplementary disclosures regarding financial instruments 33 Financial risk management and supplementary disclosures regarding financial instruments Swisscom is exposed to various financial risks resulting from its operating and financial activities. The most

More information

TD Bank, N.A. Global Trade Finance. Strategies for Smart Business Growth & Market Expansion November 6, 2014

TD Bank, N.A. Global Trade Finance. Strategies for Smart Business Growth & Market Expansion November 6, 2014 TD Bank, N.A. Global Trade Finance Strategies for Smart Business Growth & Market Expansion November 6, 2014 1 Topics to be Covered Compliance KYC & KYCC Basic Requirements Goal of Your Trade Provider World

More information

Understanding Financial Management: A Practical Guide Guideline Answers to the Concept Check Questions

Understanding Financial Management: A Practical Guide Guideline Answers to the Concept Check Questions Understanding Financial Management: A Practical Guide Guideline Answers to the Concept Check Questions Chapter 6 Working Capital Management Concept Check 6.1 1. What is the meaning of the terms working

More information

CIMA F3 Course Notes. Chapter 3. Short term finance

CIMA F3 Course Notes. Chapter 3. Short term finance CIMA F3 Course Notes c Chapter 3 Short term finance Personal use only - not licensed for use on courses 31 1. Conservative, Aggressive and Matching strategies There are three over-riding approaches to

More information

Trade Finance & Liquidity Management. - 5 May 2010 -

Trade Finance & Liquidity Management. - 5 May 2010 - Trade Finance & Liquidity Management - 5 May 2010 - Agenda Trade Finance Concepts & Trends SWIFT Trade Finance Offering BIS Solutions in the Trade Space Managing Liquidity BIS Solutions on Liquidity Mgt.

More information

INTERNATIONAL FINANCIAL SETTLEMENTS

INTERNATIONAL FINANCIAL SETTLEMENTS INTERNATIONAL FINANCIAL SETTLEMENTS Dr Katarzyna Sum Chair of International Finance Warsaw School of Economics Lecture information The material for the lectures is available on my website http://akson.sgh.waw.pl/~ksum/

More information

Debt Collection Terms and Conditions

Debt Collection Terms and Conditions Debt Collection Terms and Conditions The German-British Chamber of Industry & Commerce in London is prepared to assist British companies in collecting outstanding debts from German firms on the following

More information

ACT : INCOME TAX ACT NO. 58 OF 1962 SECTION : SECTION 24 SUBJECT : INSTALMENT CREDIT AGREEMENTS AND DEBTORS ALLOWANCE CONTENTS

ACT : INCOME TAX ACT NO. 58 OF 1962 SECTION : SECTION 24 SUBJECT : INSTALMENT CREDIT AGREEMENTS AND DEBTORS ALLOWANCE CONTENTS INTERPRETATION NOTE: NO. 48 (Issue 2) DATE: 19 December 2014 ACT : INCOME TAX ACT NO. 58 OF 1962 SECTION : SECTION 24 SUBJECT : INSTALMENT CREDIT AGREEMENTS AND DEBTORS ALLOWANCE CONTENTS PAGE Preamble...

More information

Supply Chain Finance

Supply Chain Finance Supply Chain Finance Leveraging Modern Technology To Transform Innovative Vietnam Banking Services Gerald Huang Banking Vietnam 2015 Hanoi May 19, 2015 LOCAL BUSINESS ENVIRONMENT Retail Sales grew Services

More information

HOW TO IMPROVE CASH FLOW

HOW TO IMPROVE CASH FLOW HOW TO IMPROVE CASH FLOW What causes cash flow problems? Allowing customers too much credit Overtrading How can cash flow be improved? Review trade credit with suppliers Review credit offered to customers

More information

(a) Accounts Receivable... 23,000 Sales Revenue... 23,000. (b) Sales Returns and Allowances... 2,400 Accounts Receivable... 2,400

(a) Accounts Receivable... 23,000 Sales Revenue... 23,000. (b) Sales Returns and Allowances... 2,400 Accounts Receivable... 2,400 BRIEF EXERCISE 8-1 (a) Other receivables. (b) Notes receivable. (c) Accounts receivable. BRIEF EXERCISE 8-2 (a) Accounts Receivable... 23,000 Sales Revenue... 23,000 (b) Sales Returns and Allowances...

More information

5.3.2015 г. OC = AAI + ACP

5.3.2015 г. OC = AAI + ACP D. Dimov Working capital (or short-term financial) management is the management of current assets and current liabilities: Current assets include inventory, accounts receivable, marketable securities,

More information

½ a mark for rounding up (6 marks) (b) There are a number of costs to the business associated with holding inventory:

½ a mark for rounding up (6 marks) (b) There are a number of costs to the business associated with holding inventory: EDI LCCI IQ ON DEMAND AWARD IN BUSINESS FINANCE AND BANKING OPERATIONS SAMPLE LEVEL 4 MARKING SCHEME DISTINCTION MARK 75% CREDIT MARK 60% PASS MARK 50% TOTAL 100 MARKS QUESTION 1 (a) Inventory days Receivable

More information

Annual report 2013 BNP Paribas Arbitrage Issuance B.V.

Annual report 2013 BNP Paribas Arbitrage Issuance B.V. Annual report 2013 BNP Paribas Arbitrage Issuance B.V. Herengracht 537 1017 BV Amsterdam The Netherlands Chamber of Commerce Amsterdam No. 33215278 CONTENTS Managing Director s Report 3 Financial statements

More information

Financial Advice Guide for your Business

Financial Advice Guide for your Business Financial Advice Guide for your Business Contents Section 1: Section 2: Section 3: Section 4: Section 5: Section 6: Talk to your bank Reviewing your business for the future Managing your business today

More information

LECTURE No.9 INSTRUMENTS OF PAYMENT

LECTURE No.9 INSTRUMENTS OF PAYMENT LECTURE No.9 INSTRUMENTS OF PAYMENT Cash and cash instruments The cashier s work consists in receiving cash and cash instruments such as cheques and other instruments ( documents of title to cash ) in

More information

Personal Line Of Credit terms and conditions

Personal Line Of Credit terms and conditions Personal Line Of Credit terms and conditions 1. Introduction 1.1 Definitions Unless otherwise indicated, the words: Account means the line of credit account that you have been approved for by ATB as set

More information

TAXATION OF FINANCIAL INSTRUMENTS

TAXATION OF FINANCIAL INSTRUMENTS 2 Ing. Katarína Vavrová Faculty of Business Management University of Economics in Bratislava Investment in securities is influenced not only by the relation between the intrinsic value and market price

More information

First of all, we can take stock of the situation and outline the typical characteristics of financial accounting of the German Mittelstand companies:

First of all, we can take stock of the situation and outline the typical characteristics of financial accounting of the German Mittelstand companies: 388 389 The previous chapters and our practice examples can already be used without doubt to derive a host of measures to improve the control of subsidiaries abroad. Nonetheless we would like to complete

More information

Financial analysis. Liquidity analysis Liquidity ratios are designed to measure a company's ability to cover its short term obligations.

Financial analysis. Liquidity analysis Liquidity ratios are designed to measure a company's ability to cover its short term obligations. Financial analysis Financial analysis is a service that allows evaluating company's liquidity, activity, capital structure and profitability indicators on the basis of information in the annual reports

More information

Management of Accounts Receivable

Management of Accounts Receivable Management of Accounts Receivable December 1997 Contents Preface Introduction The Accounts Receivable Process Re-Engineering Accounts Receivable Risk Management Use of Advanced Technology Debt Collection

More information

Nordea Bank AB Lithuania branch Price List for corporate customers Valid from 1 st of September, 2016. Contents

Nordea Bank AB Lithuania branch Price List for corporate customers Valid from 1 st of September, 2016. Contents Contents DAILY BANKING... 2 BANK ACCOUNTS...2 ELECTRONIC SERVICES...2 Nordea Electronic Banking... 2 Nordea Internetbank for... 2 Package of daily banking services for corporate... 2 Web Service channel...

More information

FORFAITING A USER'S GUIDE WHAT IT IS, WHO USES IT AND WHY?

FORFAITING A USER'S GUIDE WHAT IT IS, WHO USES IT AND WHY? FORFAITING A USER'S GUIDE WHAT IT IS, WHO USES IT AND WHY? By: John F Moran, Jr. Abstract Italian and West German exporters have long been familiar with Forfaiting and still provide the bulk of the market.

More information

A 2010 GLOBAL TRANSACTION BANKING HANDBOOK:

A 2010 GLOBAL TRANSACTION BANKING HANDBOOK: A 2010 GLOBAL TRANSACTION BANKING HANDBOOK: in association with: Platinum sponsor: Gold sponsor: Silver sponsor: www.financial-i.com TRADE & SUPPLY CHAIN FINANCE Honing in on efficiencies The financial

More information

Investments in Associates and Joint Ventures

Investments in Associates and Joint Ventures International Accounting Standard 28 Investments in Associates and Joint Ventures In April 2001 the International Accounting Standards Board (IASB) adopted IAS 28 Accounting for Investments in Associates,

More information

Section 10 Liabilities

Section 10 Liabilities Section 10 Liabilities Contents Page 10.1 Overview... 3 10.1.1 Classification of Liabilities... 3 10.1.2 Deciding the Disclosures to be Made... 4 10.2 Current Liabilities... 4 10.2.1 Payables... 4 10.2.2

More information

Bank Payment Obligation A new payment method

Bank Payment Obligation A new payment method Bank Payment Obligation A new payment method SWIFT s Corporate and Supply Chain Market Management team supplychain@swift.com July 2016 Digitisation of trade with BPO - a new payment method in your sales

More information

IASB EMERGING ECONOMIES GROUP 8th MEETING December 11-12, 2014 ISSUES FOR DISCUSSON: OTHER NON-FINANSIAL ASSETS AND RELATED MATTERS

IASB EMERGING ECONOMIES GROUP 8th MEETING December 11-12, 2014 ISSUES FOR DISCUSSON: OTHER NON-FINANSIAL ASSETS AND RELATED MATTERS IASB EMERGING ECONOMIES GROUP 8th MEETING December 11-12, 2014 ISSUES FOR DISCUSSON: OTHER NON-FINANSIAL ASSETS AND RELATED MATTERS National Organization for Financial Accounting and Reporting Standards

More information

1 (a) Net present value of investment in new machinery Year 1 2 3 4 5 $000 $000 $000 $000 $000 Sales income 6,084 6,327 6,580 6,844

1 (a) Net present value of investment in new machinery Year 1 2 3 4 5 $000 $000 $000 $000 $000 Sales income 6,084 6,327 6,580 6,844 Answers Fundamentals Level Skills Module, Paper F9 Financial Management June 2013 Answers 1 (a) Net present value of investment in new machinery Year 1 2 3 4 5 $000 $000 $000 $000 $000 Sales income 6,084

More information

In the chapters on Planning an SSI Unit and Business Plan, a discussion

In the chapters on Planning an SSI Unit and Business Plan, a discussion chp-14.qxd 10/18/05 12:48 PM Page 145 CHAPTER 14 Working Capital Management In the chapters on Planning an SSI Unit and Business Plan, a discussion was made on the fixed capital and the working capital.

More information

Terms and conditions for the use of Visa credit cards

Terms and conditions for the use of Visa credit cards Terms and conditions for the use of Visa credit cards 1. Scope and definitions These terms and conditions for the use of Visa credit cards are applied to the credit account granted by Sampo Bank (hereinafter

More information

Sri Lanka Accounting Standard LKAS 28. Investments in Associates

Sri Lanka Accounting Standard LKAS 28. Investments in Associates Sri Lanka Accounting Standard LKAS 28 Investments in Associates CONTENTS SRI LANKA ACCOUNTING STANDARD LKAS 28 INVESTMENTS IN ASSOCIATES paragraphs SCOPE 1 DEFINITIONS 2 12 Significant influence 6 10 Equity

More information

International Accounting Standard 28 Investments in Associates

International Accounting Standard 28 Investments in Associates International Accounting Standard 28 Investments in Associates Scope 1 This Standard shall be applied in accounting for investments in associates. However, it does not apply to investments in associates

More information

The new BPO payment term

The new BPO payment term The new BPO payment term Extending Supply Chain Finance to the PO level André Casterman Head of Corporate and Supply Chain Markets, SWIFT Member of the ing Executive Committee, ICC Co-Chair Obligation

More information

An Introduction to the Financial Supply Chain. Mapping the processes and finding the opportunities

An Introduction to the Financial Supply Chain. Mapping the processes and finding the opportunities An Introduction to the Financial Supply Chain Mapping the processes and finding the opportunities Table of Contents Project definition Objectives Scope and approach Key concepts Supply chain definitions

More information

ABOUT FINANCIAL RATIO ANALYSIS

ABOUT FINANCIAL RATIO ANALYSIS ABOUT FINANCIAL RATIO ANALYSIS Over the years, a great many financial analysis techniques have developed. They illustrate the relationship between values drawn from the balance sheet and income statement

More information

Contents. Why is export finance needed? What types of export finance are available? Which currencies can be borrowed? How are risks managed?

Contents. Why is export finance needed? What types of export finance are available? Which currencies can be borrowed? How are risks managed? Contents Why is export finance needed? What types of export finance are available? Which currencies can be borrowed? How are risks managed? What terms of interest apply? Is state-supported financing a

More information

Route planner for your global trade

Route planner for your global trade Route planner for your global trade International business Corporate Banking Building bridges, opening doors Internationalisation can provide important stimuli for company growth. However, expanding your

More information

Managing Foreign Exchange Risk

Managing Foreign Exchange Risk WHITE PAPER Managing Foreign Exchange Risk The Canadian dollar has made the headlines on numerous occasions in recent years. Its value has changed significantly and rapidly many times, greatly impacting

More information