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Services for Bankers,
Lenders, Financial Advisors and Trustees for Securitized Transactions
As lenders today, you are faced with
a number of strategic dilemmas. Your customers no longer distinguish
between U.S., overseas or export sales. Theirs is a global
marketplace. If you exclude international receivables from
their borrowing base, there is a lender down the street that
will not.
You do not want to lose your credit-worthy customers, but
you know that regulators require greater reserves for foreign
credit risk. Even worse, the regulators will frown on your
financing receivables without the expertise and/or systems
to adequately manage the risk. AND,
the cost of acquiring the expertise and building the systems
is often well beyond your budget.
You may have been looking at trade credit insurance as a tool
to manage the credit risks of these borrowers and entice new
customers with similar needs. Perhaps you want to include
a borrower with receivables to OEMS with less than stellar
credit. Domestic as well as foreign trade credit risk insurance
is again an option.
Receivables and the assignment of a trade credit insurance
policy may cover the risk, BUT
THEN
your Credit Committee weighs in by requiring
that you not only have collateral in place to secure the loan,
but you also must have a "FORMAL MECHANISM" in place
to MONITOR and VALIDATE that the collateral is, in fact, perfected
through the insurance policy.
When you look at all the administrative requirements, you cringe.
When you study a trade credit insurance policy you know that
there is more to it than simply paying the premium and "putting
it on the shelf" until the next annual renewal date. In
fact, if you have looked at political and commercial risk coverage
for receivables, you know that there are more ways to make mistakes
than you ever thought possible. Your policy may include:
- Buyer Credit Limits
- Country Credit Limits
- Policy Credit Limits
- Discretionary Credit Limits
- Excess of Buyer, Country and/or Policy Credit Limits
- Annual Policy Renewal
- Buyer Credit Renewal (Different from annual renewal)
- Buyer Limitations
- Country Limitations
- Policy Limitations
- Fee Schedules - policy, country and/or buyer
- Monthly, Quarterly or Annual Premium and Shipment Reports
- Monthly, Quarterly, or Annual Past-Due Reports
Keeping track of all of these factors individually, and for
each buyer under the policy, can be a daunting task. Even the
most experienced among us can make mistakes. That is why Trade
Banker® was created. It eliminates
most of the common errors and addresses the most common reasons
for claim denial.
IT GUARDS AGAINST THE FOUR KEY REASONS
FOR CLAIM DENIAL:
- Failure To Report ALL
transactions
- Underreporting ALL
transactions
- Inadequate Buyer Limits (shipping without
coverage)
- Late Filing (and late premium payment)
How does Trade
Banker® work?
Here is a simple diagram of how this on-line system works:
At the same time, you do not want to alienate your borrower
due to high costs or administrative burdens. That is where Trade
Banker® has solutions for
every bank's needs, large or small.
There are three different options
available for how to effectively use Trade
Banker®:
I. If your customer has an insurance policy,
you can REQUIRE
that they use Trade Banker®
to manage their policy while providing you with the reported
details as part of their debt covenants. The cost per borrower
is minimal. It is like a telephone bill only self-liquidating
because of savings in administrative coats and reduced human
errors. Best of all, your customer can make you a user on its
system to audit, download and transmit information to loan administrator.
You can also pay the policyholder's premium on its behalf (nonpayment
of premiums being one of the most common reasons for claim denial).
If you are a small lender, a side benefit
of this system is that it can help you manage country risk --
yours and your borrowers. a "World" policy can be
established with countries as "buyers" with individual
credit limits. "Invoices" become country risk utilization
and "Payments" reduce utilization.
II. If you have an insurance
policy covering shipments from multiple customers,
you can use Trade Banker®
just like a borrower, but maintain records for ALL of your customers
in your own secure database. The cost can be passed on to the
borrowers as fees or paid for through balance requirements or
other cost-offsetting mechanisms. The cost in this case, like
before, is modest when compared to the services received.
One of the best features for your borrowers is that they can
provide invoice and payment information to you in delimited
ASCII format to upload the data electronically into Trade
Banker®. By using Trade
Banker's® convenient data
management feature, you can also provide customers with Microsoft
Excel® formatted reports. Both you and your customer/borrower
can benefit from the system without the added hassle of paper
shuffling and "telephone tag".
The regulators and your credit committee will be less likely
to cite your practices for improvement if you have a system
that reduces errors and costs less than hiring trade experts
to provide you with auditable records.
III. If you have customers
with insurance polices as well as one of your own,
you can license the software for installation on your own Intranet
system. This is recommended for high volume users or trade finance
departments that manage a wide variety of insured financing
programs. It can also be a great way to manage securitized receivables
financing either for a single customer or as a multiple customer
program. The program may even be able to reduce the cost of
administration and funding by assuring policy compliance and
accurate record keeping, always a competitive issue.
Trade Banker®
is a cost-efficient system of managing your trade credit insurance
needs to:
- Eliminate human errors
- Reduce manpower costs of administration and management
- Improve employee efficiency and proficiency
- Reduce Claim Denials
- Provide reports in user-friendly MS Excel® format
- Improve and increase financing-eligibility of insured
receivables
- Requires no special software installation - easy for IT
administration
- Provide a high security environment - four levels of password
protection guards against unauthorized access
- Available 365/24/7 (no vacations, leaves or holidays)
Trade Banker®
is a service and, whether used on-line or installed on your
own operating system, it pays for itself. AND
you are only paying only for this service, not for extraneous
features or additional products that you do not need or want.
For more information, Contact
Us or call (404) 223-2453 for more information.
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