Trade Finance an evolutionary time

1
Trade Finance an evolutionary time

• Rapidly changing environment is driving the
  development of new electronic platforms
• Globalization of business movement to treasury
  centralization to drive efficiencies
• Move from Commercial Letters of Credit to Open
  Account
• Increased regulatory scrutiny
• Sarbanes Oxley USA Partiot Act AML
  requirements
• Drive for streamining of Global Supply Chain
  management
• Increased number of bank relationships
  subsidiary activity results in less control over
  treasury management
• Multiple interfaces / connectivity to various
  electronic banking systems
• Investment in new technolgy is a constant
  priority for corporates banks
• Greater integration, flexibility efficiencies
  across systems operations

2
Banks and corporates embark on the same
objectives to optimize trade processesing

• increase process efficiency and security
• reduction of costs through improved process
  efficiency and increase of STP (straight-through-p
  rocessing)
• lower operational risks due to reduction of
  manual processing
• complete audit trails for monitoring of all
  process steps (audit compliance, US-GAAP, SOX)
• integration with existing ERP/BackOffice Systems

3
but follow different concepts
high
Multibank /-participant platform (many-to-one
concept)
external communication gateways (e.g. Propriatary
networks, DTA, secure email etc.)
proprietary Bank applications (one-to-many
concept)
banks preferences
low
customers preferences
high
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Proprietary bank systems (one-to-many concept)
Client
Client
Bank
Client
Client
Client
Client

• Customer view
• use of various bank portals
• data is hosted on various external resources
  difficult to consolidate
• no customization
• no ERP/ Back-Office intergration

• Bank view
• high level of BackEnd integration
• highest STP-ratio possible
• high level of customer retention

5
External communication gateways (e.g.
Proprietary networks, DTA, secure email etc.)
Bank A
Service Provider A
Corporate
Service Provider B
Bank B
Service Provider C
Corporate

• Bank view
• BackEnd integration needed separately for each
  message format
• use of network results in additional cost
• low STP-ratio if not integrated into BackEnd
  systems
• data transmission via web requires PKI agreements

• Customer view
• separate BackEnd application needed
• use of network result in additional cost
• ERP/ Back-Office intergration is cost intensive
• the concept of data exchange via external
  networks leads to multiple identical data sets
• data transmission requires PKI agreements

6
Multi bank/participant Platform (many-to-one
concept)
buyer
supplier
Bank 1n
insurer
Corporate
carrier
customs

• Customer view
• one data source
• customization possible
• easy ERP/ BackOffice integration
• complete audit trail
• all participants in a transaction can be involved

• Bank view
• no participation fees
• BackEnd integration can be staged (depending on
  the number of customer applications)

7
Corporate centric multi-bank systemImproves
visibility, monitoring and control for Treasury
All process participants interact on one
web-based true multi-bankand multi-entity
process platform _at_Global Trade
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Case Study Standby LC/Guaranee Issuance Solution
9
Case Study Standby LC/Guarantee Issuance
Challenges

• Key Objectives
• Harmonisation of documentation and saving of L/G
  commissions
• Improvement of transparency and avoidance of
  discrepancies between banks' and EADS' records
• Preserve flexibility for subsidiaries but enforce
  standard policies
• Improve efficiency
• Achieve a better diversification of business
  allocation between the banks
• High and quick acceptance of the new solution by
  subsidiaries and banks

• Initial Situation
• Management of L/G is decentralized and handled
  independently by each subsidiary
• L/G exposure with 47 banks (applied by 52
  subsidiaries)
• Reconciliation of L/G data and settlement of fees
  is time consuming and prone to errors
• Central treasury has to monitor the terms and the
  availability of L/G facilities and the allocation
  of business to the banks

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Case Study Standby LC/Guarantee Issuance
Solution
25 identical Bilateral Facility Agreements
EADS N.V.
25 Banks
L/G Agent
Sub-Limits / Guarantees
Co-ordination Agreement
38 Subsidiaries

• EADS successfully arranged a new L/G Umbrella
  (existing exposure was rolled in) with 25
  identical bilateral L/G facilities that were
  allocated in a quantity tender.
• EADS appointed HVB as a service provider to 25
  banks and 38 EADS subsidiaries.

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Case Study Standby LC/Guarantee Issuance -
Technology

• Solution
• Web-based for 24x7 availability and easy rollout
  to 38 EADS divisions and 25 banks
• Configurable workflow engine manages all
  authorizations incl. syndications and club deals
• Automatic e-mail alerts and tracers ensure
  compliance with response-time guarantee
• Integrated credit line management module
  automates monitoring credit utilizations
• Flexible transaction data model simplified
  conversion of the existing guarantee portfolio
• Billing module automates calculation and
  allocation of fees including previous period
  adjustments and multi-bank reconciliation
• 6 months from concept to production
• Substantial reduction of operational costs

LG Issuance
Bank Agent
38 divisions
Multi-bank
Agent System
25 banks
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Case Study Export Documentary Credit and
Collection Solution
Automotive Manufacturer
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Case Study Export Documentary Credit
Collection Challenges

• Improve cooperation between factories, that
  prepare documents, and L/C department, that
  receives and allocates L/C advices
• Improve visibility of each step in the
  transaction process
• Reduce number of discrepancies in the
  presentation
• Improve efficiency by automating transfer of L/C
  information into invoicing system and relevant
  product information into the _at_GlobalTrade system
  for preparation of documents
• Allow L/C department to electronically pre-check
  L/Cs with banks
• Enhance straight through processing through
  enablement of foreign banks to send export L/C
  messages electronically

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Case Study Export Documentary Credit
Collection Solution
L/C Department
e-Advices
Presentations
Instructions and Documents
Payments
Domestic and Foreign Banks
Logistics Providers

• Electronic Delivery of export L/C messages
• Financial release and cooperation between the L/C
  Department and Factories
• L/C department can assist factories regarding
  issuing compliant documents
• Logistic providers can be connected to the
  platform and exchange electronic documents with
  the L/C Department, Factories and others
• Global visibility and real time reporting

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Case Study Export Documentary Credit
Collection - Technology
Shipping Forwarding InsuranceCompanies
L/C Department Factories
Presentation Information
Collection Module
Export L/C Module
SAP Financials
SAP AR Interface
Global Ordering
L/C Info Vehicles Parts Data
Export System
ERP Interface
Electronic Banking

• Web-based L/C and Collection management system
  for easy world-wide roll-out to factories, 3rd
  party document providers and banks
• Improved efficiency and reduced discrepancies by
  automating transfer of
• L/C information into corporates ERP system(s)
• Relevant product information from the invoicing
  system into document preparation instructions
• L/C and collection presentation information into
  accounts receivable system for reconciliation of
  incoming payments

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About GTC

• GTCs _at_GlobalTrade technology helps buyers,
  sellers, traders, and financial institutions
  communicate faster and more efficiently to free
  up working capital, realize cost savings, reduce
  risks and improve monitoring and control
• Our customers are
• corporations that need consolidated access to
  multiple banks and logistic providers
• banks that require supply chain finance solutions
  to meet their clients needs
• Our Expertise is in multi-bank financial supply
  chain systems where the corporate drives the
  business process

2006 Canadas 10th Fastest Growing Company by
Profit Magazine
Best Independent Trade Platform/System Provider
for 2005, 2006 and 2007 by Euromoneys Trade
Finance Magazine
2005 2006 2007
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_at_GlobalTrade Platform
Export LC / Collection
Import LC / Collection
TSP



Back-office and ERP Systems



Internet
Standby LC/Guarantee Receipt
Standby LC/Guarantee Issuance
Bank
Internet
Open Account Financing
Custom Built Systems
Global Trade Management Systems
ERP Interfaces
Multi-Office Management
Workflow
Data Access Security
Data Mapping
Multi-Bank and Logistics Connectivity
Collaboration
Progress Monitoring
Credit Limit Monitoring
Document Generation
Billing
User-Defined Reporting
Archiving
Business Network Modules

• web-based for global connectivity and quick
  deployment
• interfaces to internal and external systems
• modular architecture for Global Trade Management
  product systems
• can be installed internally, at a managed hosting
  provider or offered as an ASP system

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Contact Information
Jacob Katsman GlobalTrade Corporation katsman_at_
globaltradecorp.com Tel [phone]
8520 www.globaltradecorp.com