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China Systems Trade Finance Solutions


Trade Services Utility (SWIFTNet TSU)


More than 80 percent of global trade is on an open account basis with limited bank involvement, apart from the payments.

Corporations are moving from traditional trade instruments to open account-based trading. They require solutions that help them improve their inventory control, reduce working capital requirements, and manage their payables and receivables in an efficient way. Discrepancies in documents need to be detected instantaneously to avoid delays and additional costs in the trade process. Banks are well placed to provide risk mitigation services if they have sufficient visibility on the transactional events from Purchase Order to Payment and parties involved. SWIFTNet TSU aims to provide that visibility.

SWIFTNet TSU creates visibility, allows matching and pre-matching of the trade details, and keeps track of outstanding at Goods Lineltem level, a previously labour-intensive and costly activity. Data reliability adds value to all the parties involved, and creates opportunities for banks to provide finance services at the different trigger points such as PO Issuance/Acceptance and Shipment and Invoice Acceptance. Using the SWIFTNet TSU data banks can also offer document preparation and reconciliation services on account payables and receivables, since they already handle the payments traffic.

 China Systems has embedded TSU messaging capabilities and ISO20022 standards within our Java EE Trade Services platform, Eximbills Enterprise, in the same way as traditional SWIFTNet FIN messages. Our customers can now benefit from the opportunities offered by SWIFTNet TSU.

SWIFT have certified the solution and awarded China Systems the SWIFT Certified Trade Services Utility [TSU] label.

Although the solution can be used in standalone mode, we have focused from the beginning on full integration into our back office solution.

Key capabilities and advantages of the solution:

• Via the XML STP engine, incoming TSU messages can trigger new business events on the back office and can be advised to the corporate via our front end. The solution also supports non-TSU based processing flows (e.g., manual, EDI for Factoring, etc.). • TSU messages can conditionally be generated from our back end through transaction processes, and updates can automatically be provided to the corporate via the front end, as part of the underlying open account transaction.

• The solution supports the processing of a Bank Payment Obligation (BPO) and related credit management requirements, whereby a bank can provide a conditional irrevocable guarantee of payment to another bank; with the option to have this backed up by a Notice of Intent to Pay message from the Buyer to the Seller. This enables new value propositions in the area of supply chain financing. Combined with already improved reconciliation capabilities of MT103 and MT202 payment messages with TSU transactions, banks can further optimize their open account processes and service offerings.

• Existing back and front end capabilities are embedded with TSU messaging flows, e.g., the corporate can request finance via the front end based on an Open Account/TSU transaction; the back office can provide finance at the different trigger points during the TSU/Open Account processing flow.

• Existing back office functions such as finance, commission and charges processing, accounting, credit line management, generation of output and reporting, and interest accruals can be applied to Open Account/TSU as well as to traditional trade transactions.

• A Buyer/Supplier Relationship Management module can control Open Account/TSU arrangements and related financing agreements between the two parties.

• The Bank File will store data on bilateral TSU arrangements with correspondent banks to drive message exchanges and business logic.

• The Enterprise toolkit allows banks to use their business ingenuity to build new business processing rules around the TSU message flows, thereby expanding their financial supply chain services portfolio.

• Optionally, our Outgoing and Incoming Clean Payments module can be used, which would allow automated reconciliation of outstanding invoice and related finance records via the Payments STP engine. Alternatively, this can be achieved via integration to the bank's existing Payments infrastructure. Our front end Customer Enterprise allows buyers to manage their Accounts Payables and suppliers to manage their Accounts Receivables, both for TSU and non-TSU transactions.

 China Systems now offer TSU messaging, Supply Chain Financing and Factoring capabilities as an integrated part of our Java EE-based Eximbills Enterprise solution, which also covers the full range of traditional Import and Export Trade Services. For more information, please refer to the Supply Chain Financing & Factoring flyer.

As part of the solution, you may opt to use the Java EE-front end component, Customer Enterprise, to exchange information with buyers and suppliers on Purchase Orders, Invoices, Transport Documents, and related financing transactions.

Customer Enterprise can also be used as a collaborative channel for buyers and suppliers to exchange information in real time. The back-end component can monitor these exchanges and intervene to provide financing to either party, upon request or based on predefined agreements.

Since buyer and supplier needs can be quite specific and the Open Account space is a very dynamic business area, our Enterprise toolkit can be used to define new or adjust existing business processing rules, regardless of whether these are related to processing flow, data requirements, finance trigger points, limits management, financing terms, commission and charges handling, reporting, output or interface requirements, etc.

The entire solution runs on an SOA-compliant Java EE platform, which is an accepted industry standard endorsed by many major enterprise computing players such as IBM and Oracle.