perlo
01-20-2008, 07:28 AM
By Zung, Michael M.
Large corporations with heavy export volume often have significant documentary collection services and letters of credit (L/C) needs. handle this effectively, companies try to a strong relationship with a single bank that can handle their trade service financing as well as their L/C negotiations. Companies direct most of their cross-border business to this single bank, instructing their foreign customers to advise/confirm their L/Cs through this bank and their open account customers to wire all remittances to the bank.
Trade finance business is not a high-margin service for most banks, so it is not surprising that few banks offer state-of-the-art technology to their customers. However, with lower costs of technology in today's environment, banks should consider the return from a larger relationship with international customers and rethink whether they should improve the technology they use for trade finance services. This would not only reduce their own costs in this area, but it also would solidify their customer relationships. Providing much-needed international trade services can open the door for the bank to pursue other corporate treasury services, such as domestic collection and concentration or short-term credit facilities.
Engelhard's Search
Engelhard Corporation is a Fortune 500 chemical and catalyst manufacturer in New Jersey. Engelhard had revenues of $3.6 billion in 1997 and approximately 40 percent generated from exports. They ship a significant volume of clay-based chemicals that weigh a lot relative to cost.
While the credit department was somewhat satisfied with the bank handling our export collections, about a year ago we decided to explore what other banks had to offer. We believed that we had a certain amount of negotiating leverage. We are the 16th largest exporter by volume in the United States, as measured by 20-foot container equivalent units (TEUs). We had shipped 20,000 TEUs in 1996. We were processing over 40 letters of credit and more than 50 documentary draft collections monthly.
Our Requirements
In choosing a bank to handle our export needs we outlined four major requirements: competitive fees, the level of customer service offered, a worldwide presence and cutting edge technology.
Due to the nature of our business and our volume, the key concern for us was technology. This also became the determining factor in our selection process because many of the banks with up-to-date technology also were comparable when it came to the other three criteria. What seemed to distinguish the various banks were their technological and systems capabilities to support our goal of automating what had traditionally been a very manual process. In fact, producing documents and drafts associated with export shipments is one of the last uses of the manual typewriter in many large export corporations.
http://www.allbusiness.com/finance/724784-1.html
Large corporations with heavy export volume often have significant documentary collection services and letters of credit (L/C) needs. handle this effectively, companies try to a strong relationship with a single bank that can handle their trade service financing as well as their L/C negotiations. Companies direct most of their cross-border business to this single bank, instructing their foreign customers to advise/confirm their L/Cs through this bank and their open account customers to wire all remittances to the bank.
Trade finance business is not a high-margin service for most banks, so it is not surprising that few banks offer state-of-the-art technology to their customers. However, with lower costs of technology in today's environment, banks should consider the return from a larger relationship with international customers and rethink whether they should improve the technology they use for trade finance services. This would not only reduce their own costs in this area, but it also would solidify their customer relationships. Providing much-needed international trade services can open the door for the bank to pursue other corporate treasury services, such as domestic collection and concentration or short-term credit facilities.
Engelhard's Search
Engelhard Corporation is a Fortune 500 chemical and catalyst manufacturer in New Jersey. Engelhard had revenues of $3.6 billion in 1997 and approximately 40 percent generated from exports. They ship a significant volume of clay-based chemicals that weigh a lot relative to cost.
While the credit department was somewhat satisfied with the bank handling our export collections, about a year ago we decided to explore what other banks had to offer. We believed that we had a certain amount of negotiating leverage. We are the 16th largest exporter by volume in the United States, as measured by 20-foot container equivalent units (TEUs). We had shipped 20,000 TEUs in 1996. We were processing over 40 letters of credit and more than 50 documentary draft collections monthly.
Our Requirements
In choosing a bank to handle our export needs we outlined four major requirements: competitive fees, the level of customer service offered, a worldwide presence and cutting edge technology.
Due to the nature of our business and our volume, the key concern for us was technology. This also became the determining factor in our selection process because many of the banks with up-to-date technology also were comparable when it came to the other three criteria. What seemed to distinguish the various banks were their technological and systems capabilities to support our goal of automating what had traditionally been a very manual process. In fact, producing documents and drafts associated with export shipments is one of the last uses of the manual typewriter in many large export corporations.
http://www.allbusiness.com/finance/724784-1.html