Trade Finance for Treasurers

| 23-11-2021 | Wim Kok | treasuryXL | LinkedIn

The current global trading environment has exposed new complexities and heightened risks associated with international trade, notably through Covid 19. Following the latest studies (* ADB) the global trade finance gap grew to an all-time high of USD 1,7 trillion. Especially for SME sector (being hardest hit) the availability of bank liquidity and credit is increasingly under pressure. As a result, the playing field of international trade needs greater focus on understanding and mitigating risks and making use of new opportunities in the accelerating digital world of Trade Finance.

“Following the latest studies (* ADB) the global trade finance gap grew to an all-time high of USD 1,7 trillion.”

The ability to quickly access cost-effective financing when and where it is needed is key for also treasury departments. The new challenges and rapid changing finance landscape prompts many Corporate Treasurers to re-educate themselves and/or seek specialized expertise from trusted advisors, identify new and reliable alternative funding sources, streamline their digital journeys and current (internal) processes to achieve additional efficiency, transparency and cost reduction.

The use of Trade Finance solutions via (mostly standard and “old”) banking products goes way back in history to the golden age (Bill of exchange and promissory note financing). Our TreasuryXL expert Wim Kok can guide and advise you on the roles of banks and other key players, including emerging Fintech providers, insurers and alternative providers. It is essential for the Treasury department to address the needs and or pain points of the company select the most appropriate solution or partner to solve the problems or make use of new opportunities.

To give you an idea of ​​the regular trade finance products that are available to facilitate trade, we list the instruments below.

Why is Trade Finance so Important to Corporate Treasurers?

  • Obtaining liquidity using risk mitigation and financing options from international trade transactions
  • The role of banks in trade finance products (risk mitigation / financing and transaction processing)
  • Obtaining insight into the various trading conditions (Incoterms), the additional securities (title of documents, warehouse warrants) and credit insurance principles

Below is a brief overview of the most commonly used trade finance instruments, i.e.

  • Documentary Letters of Credit (import, export), Stand-by LCs, Guarantees and Indemnities.
  • Documentary Collections (CAA, CAD) – Bills of exchange and Promissory notes. Obtaining liquidity through discounting the instruments (with or without recourse).

Besides the classical trade finance banking products liquidity techniques such Receivable Finance or the Factoring of complete debtor portfolios (with or without credit insurance) are also frequently in the industry.

Your TreasuryXL trusted advisor Wim Kok is available for advice on the use of the various trade finance products or techniques.

Whereas the majority of trade finance products are (mostly) standardized and in international accepted format that are subject and adhere to the various international rules issued by the ICC** to name a few: UCP 600, ISP98, URDG758 and Incoterms etc.

 

Wim Kok

International Business Consultant
Trade Finance Specialist

 

 

 

 

 

*The global trade finance gap grew to an all-time high of $1.7 trillion in 2020, a 15% increase from two years earlier, as the pandemic heightened economic and financial uncertainties and devastated global trade, according to the latest Trade Finance Gaps, Growth, and Jobs Survey, released today by the Asian Development Bank (ADB).

**ICC Headquarters 33-43 avenue du Président Wilson 75116 Paris, France Tel: +33 (0) 1 49 53 28 28 Fax: + 33 (0) 1 86 26 67 44 Email: [email protected]

 

Top 5 most read articles at treasuryXL.com and LinkedIn of 2020

| 31-12-2020 | treasuryXL | Kendra Keydeniers

The last day of 2020 is here. The whole world experienced a ‘year not to forget’. I can imagine that when you popped the champagne last year you had other thoughts and plans in mind for 2020.

To make sure you don’t miss out on the pieces that made the most impact this year, we sifted through the data to uncover the articles our readers loved most in 2020 on our website and LinkedIn. (Treasury Topic ‘What is’ articles excluded).

Top 5 treasuryXL website articles of 2020

  1. Corporate Governance and Treasury | Embrace the Corporate Treasury Policy

    by Francois De Witte

  2. Top 5 most common pain points in Treasury

    by Michael Ringeling

  3. Corporates: Caveat IBOR!

    by Daniel Pluta, Enigma Consulting

  4. Exclusive interview with FX specialist Arnoud Doornbos about FX Risk Management

    by treasuryXL, Arnoud Doornbos

  5. How to simplify Procurement and Finance in the Supply Chain

    by Wim Kok

Top 5 treasuryXL LinkedIn posts of 2020

  1. Nomentia (former OpusCapita) makes Liquidity Management free for all customers!

    by Nomentia

  2. What is the difference between Treasury and Accounting?

    by TreasuryXL

  3. The missing part of a Treasury Job Description

    by Aastha Tomar

  4. An introduction to Forwards, Futures and Options Part 1

    by Aastha Tomar

  5. Partner Interview Series | The deeper dive with TIS (Treasury Intelligence Solutions)

    by treasuryXL, TIS

Within two weeks we will post a full recap of 2020 with an overview of the partners and treasury experts that have joined us, together with some interesting treasuryXL facts!

Thank you for being part of the treasuryXL community. Now it’s time to pop the champagne! Let 2021 begin…

 

Kendra Keydeniers

Director, Community & Partners treasuryXL

Recap of the first ‘Meet the Expert’ interview series and full overview

| 04-08-2020 | by Kendra Keydeniers |

A couple of months ago, we started the ‘Meet the Expert’ interview series with experts from the treasuryXL community with different treasury expertise.

Treasury needs to deal with an increasing availability of alternative financial products, intensifying risk management requirements, regulatory and compliance constraints.

What do our experts think about this rapidly growing movements within the treasury world? What developments do they expect in the future? What opportunities do they see?

We interviewed 10 experts over the last 10 weeks and asked them about their treasury career, experiences, the future of treasury and of course how COVID19 impact treasury from their perspective.

Did you miss an interview? No worries, here is a full overview of the ‘Meet the Expert’ series:

 

 

 

Bertus van de Kamp

Senior Business Consultant & Cash Management Specialist

read interview

 

 

 

 

 

Wim Kok

International Business Consultant & Trade Finance Specialist

read interview

 

 

 

 

 

Aastha Tomar

FX & Derivatives | Debt Capital Markets | MBA Finance | Electrical Engineer | Sustainability

read interview

 

 

 

 

 

Michael Ringeling

Corporate Treasury, Corporate Control and Banking

read interview

 

 

 

 

 

Olivier Werlingshoff

Cash- and Treasury management

read interview

 

 

 

 

 

Ger van Rosmalen

Trade Finance Specialist

read interview

 

 

 

 

 

Francois De Witte

Owner at FDW Consult | Sr. Project Manager at Gaming1 | CFO at Safetrade Holding

read interview

 

 

 

 

 

Arnoud Doornbos

Interim Treasury & Finance | Consultant | FX & Interest Derivatives | Treasury Outsourcing| Risk | Fintech | TMS

read interview

 

 

 

 

 

Vinzenco Masile

Treasury Expert/Credit Risk Manager

read interview

 

 

 

 

 

Arnaud Béasse

Debt Management Specialist

read interview

 

 


A big thank you to everyone that worked with me on this series, to everyone that selflessly shared their knowledge and experience with all of us! You guys rock.

If you’ve enjoyed our series so far, don’t worry, this is just the beginning! We are looking into more perspectives to share with you later this year when we will start the second ‘Meet the Expert’ interview series.

Take care and thanks for reading,

Kendra Keydeniers
Community & Partner Manager at treasuryXL

Meet our Experts – Interview Wim Kok

02-06-2020 | Wim Kok | treasuryXL

This week you will meet Wim Kok, a Trade Finance Specialist with decades of experience.

Wim started his financial advisory company recently after a long career in the banking industry (> 40 years). During his banking career his interest and focus was always connected to the commodity & trade finance industry both in sales and product innovation. Activities in various senior roles, including relationship management, head of department, change management and start up business (internationally).

Nowadays Wim is involved as independent advisory in supply chain management and digitalisation of the logistic industry. Building bridges, simplifying (trade) finance and logistics. Closing the gap between procurement and finance (treasury).

We asked him 11 questions, let’s go!

1. How did your treasury journey start?

I started working in Treasury (assistant treasurer) during the late 70 ties i.e. my 1st job was with Continental Grain  a New York based grain trading company with a strong foothold in Europe.

The Rotterdam Harbour, at that time, was the physical entry point for US grain coming to Europe.

I worked with 3 merchant banks (Slavenburg, Bank Mees & Hope & Albert de Bary) pooling and netting bank accounts (manually) to optimise currency and debit/credit interest positions for the Rotterdam company.

2.  What do you like about working in Treasury?

I see the treasury operations as a pivotal function within an organisation meaning that you have to know the cash generating mechanics of the company inside out. Seamless use and coordination of cash contributes to a seamless treasury function and an added value for the company.

3,  What is your Treasury Expertise?

I started my career in the late 70ties as assistant treasurer with an American global grain trading company in the Netherlands – My main task was to streamline and optimise the money flows in 8 different main currencies between 3 banks. This was the early start of the cash management development. Later on I moved into the trade and commodity structured finance direction.

4.  Do you have examples of risk mitigation, creation of opportunities and/or cost savings?

Very simple netting and pooling arrangements (interest risks). Discounting receivables, Bills of Exchange, Documentary L/C’s or insurance arrangements, making use of swaps and FX derivatives (currency risks) etc. on the payable side – supplier finance structures making use of the rating of the corporates.

5.  What has been your best experience in your treasury career until today?

That’s difficult to mention as my treasurer career was rather short, but I have seen the position and function grow over the years bridging the silo’s within a company (especially within the bigger corporates).

6.  What has been your biggest challenge in treasury?

At my time with Continental Grain is was the perception of the people. Hugh silo’s between booking /audit and sales / marketing we started to change the perception and managed to bridge the different worlds of finance and commerce by showing that a good treasury function earned additional income.

7.  What’s the most important lesson that you’ve learned as a treasurer?

My most important lesson learnt (and that seems a bit odd having worked within banks for almost 40 years) is: as a larger corporate always make sure you keep your independence in other words select more providers to support you.

8.  How have you seen the role of Corporate Treasury evolve over the years?

Very much in such way that in the bigger Corporates you see nowadays a lot of inhouse banks and for mid & large corporates a treasury function is more or less the standard.

9.  The coronavirus is undoubtedly an unprecedented crisis. In general, can you elaborate on the impact this virus has on treasury from your perspective?

In this respect I would like to refer to the article I recently wrote for TreasuryXL: ”How to simplify procurement and finance in the supply chain” – I think a lot of companies will have to reconsider their current (disrupted) supply chains and financial systems. Companies going into 2021 will have to adopt to the fast changing pace in any discipline or a combination be it digitalisation, IoT, Blockchain, AI, robotics or the Cloud

10.  What developments do you expect in corporate treasury in the near and further future?

Definitely transparency, efficiency and speed will improve dramatically due to interconnectivity of systems and transactions, data protection (and use) and cybersecurity will become a more important factor.

11.  What is your best advice for businesses without a Treasurer?

Try one because a good treasurer will always earn (at least) himself back for the company.

 

Wim Kok

International Business Consultant

Trade Finance Specialist

 

 

 


Does your business need support in Treasury or a Treasury QuickScan?

We have treasurers available, go to Rent a Treasurer for all information.



How to simplify Procurement and Finance in the Supply Chain

| 21-04-2020 | Wim Kok | treasuryXL

Accelerated by the Corona pandemic, an unforeseen global crisis affecting us all, digitalisation, transparency, efficiency and real time settlement has moved dramatically up north on the priority scale of all global industries. At least it makes an important move to rethink sustainable business models in the post Corona era.

Secured (cyber proof) Platform connectivity bolstering strategic supply chains will become a very important aspect in the future survival of trading companies globally.

More and more initiatives are seen to phase out the “old school” handling of paper-based settlement. Rain forest of papers are being used to settle payment out of export and import contracts. Its cumbersome processes to settle payments through bank using old payment methodologies like Bills of Exchange, Cash Against Documents and Documentary Letters of Credit. Do not misunderstand my objective, nowadays contract settlements are strongly embedded in society supported by different legislation countries by country. This is also the reason why things are moving so slowly. Institutions like ICC, Swift, Customs & Harbour authorities (to name few) are constantly trying to move the needle in digitising processes. The reality is that the transformation goes to slowly. Maybe when COVID19 is behind us there will be an acceleration after reconsidering existing business models of supply chains dependent from documentary evidence.

In this 15 trillion USD ($) global trade market there is enough space next to the big banks and big corporates, who started to explore already after the 2008 crisis using agile inhouse innovation labs.

Initiatives like Komgo and R3 syndicates already looking at blockchain technology, however still geared toward the larger (commodity) trading community. It is interesting to see that the big Agri trading companies recently started a new initiative Covantis.

After PSD2 introducing Open banking a lot of financial FinTech’s are entering the market not having the burden of an absolute (outdated) big banking system. Big tech giants like google, Facebook and Amazon are looking into their enormous data bases trying to grasp their market share.

TransDocLink is developing a platform based upon the above ideas, capturing as much as possible stakeholders & features. Transdoclink already can make use of the TDeal concept on its platform. Creating in a supplier/buyer relationship full transparency, efficiency and trust in their contracted supply chain. A dashboard gives visibility around the whereabouts of the goods and money (triggered movements are settled through a dedicated wallet). TransDocLink aims to serve the SME market in an open (independent) platform environment.

In 2016 TransDocLink already recognised that the Letter of Credit (and its very paper heavy documentary settlement) is a “dinosaur” in the expensive settlement of payments in the banking industry. The aim was to digitise these processes and offer an alternative on a platform-based initiative. Buyer and Seller create on the platform a trusted lane (supply chain) by matching contracts. The settlement of agreed terms is being executed through an independent trust account instead of the alternative using an expensive settlement via Letter of Credit. The original concept was built around a straight through processing payment engine (exempted by the Dutch Central bank) and further enhancements are being made (escrow-TDeal , working capital, asset based & trade finance modules) to keep up with the quick changing landscape in the FinTech industry.

Curious what TransDocLink can do for your business? Visit transdoclink.com and/or contact me directly for some advice.

 

Wim Kok

International Business Consultant
Trade Finance Specialist