On March 20, the U.S. Senate failed to renew the charter for the U.S. Export-Import Bank, which provides significant financial support to parties that encourage global trade activity and thus benefit the U.S. economy. While the Ex-Im Bank offers some direct loans to international buyers of U.S. exported goods, the majority of its activity is in the form of guarantees and insurance-backing loans made by banks to small businesses. Government-sponsored guarantors are critically important to the ability of small businesses to trade internationally. Since the Ex-Im Bank does not contribute to U.S. debt, the Senate’s decision may well prove short-sighted. In fact, … Continue Reading →

Just like any other continent, Africa has not been immune to the impact of the credit crunch and subsequent economic recession. Even so, a conservatively managed system of banks, lack of banking system legacies, and counter-cyclical growth of prices of commodities of which African countries are preeminent producers had the net effect of growing gross domestic product (GDP) and trade figures in African countries. Given these premises, Aite Group has been researching cash management and trade finance solutions that African banks currently offer their corporate clients. Trade is the main indicator of contribution to growth in many developed and developing countries. … Continue Reading →

This follow-up to last month’s post will discuss how the experience of B2B solution providers is relevant to financial institutions involved in developing global transaction services (GTS) on platforms. The examples come from Ariba, whose vision has enabled companies to facilitate and improve B2B procurement processes via the Internet. In 2006, Ariba decided it was time to approach a lower-tier marketplace that comprised small and midsize companies. Technology innovation enabled the shift, thanks to the introduction of the Software-as-a-Service (SaaS) delivery model. Ariba also completely re-engineered its product suite in line with the SaaS model; as described by one of … Continue Reading →

SunGard’s recent acquisition of PredictiveMetrics (PMI), a provider of predictive scoring and analytical services for trade credit, debt collections, utilities, and other markets, has all the numbers to set a milestone in the use of analytic tools in supply chain finance (SCF). Until now, various vendors and banks have offered online applications (e.g., Ariba’s Spend Visibility, Citi’s Working Capital Analytics, JPMorgan’s Receivables Edge) that let users analyze the impact of their current financials on working capital. But what about a software that takes a look at your accounts receivable (A/R) and suggests the best treatment to get the most liquidity … Continue Reading →

I recently had an enlightening conversation with Herbert Broens, head of trade finance at Bayer, the German pharmaceutical and chemical multinational, on the topic of trade finance and regulation. Basel III will soon affect the way European corporate treasuries handle their trade finance business; though the outcome is uncertain, corporate executives are starting to prepare. The most significant conclusions from our conversation are summarized in this post and illustrate how regulatory dynamics are perceived by a corporate executive involved with trade finance decisions. First, a bit about trade finance. Corporate treasury executives can control their trade finance volumes with a direct impact to … Continue Reading →