Trick or Trade !

Halloween is really one of my favorite times of year, with the kids in costume and the free chocolate, what's not to like. Thinking and planning this morning the strategy for this evenings Trick or Treat rounds, it dawned on me who in our industry is playing Trick or Trade?

So, with a little help from my friendly Zombies and Teenwolfs, let's play!

There are banks today that are expanding their trade business with additional supply chain financing activates. The results for them are good with their best corporate clients taking advantage of these added services. Unfortunately, the supply chain financing services are not being offered to the Small and Medium Enterprises (SMEs) where this type of financing is really needed. The effect is that banks are hurting their best and biggest clients as they depend on SMEs to produce and consume their goods and services. Trick or Trade?

The Bank Payment Obligation (BPO), has been earlier this year, has been formalized by the ICC Banking Commission with the release of the rulebook, Uniform Rules for the BPO. This makes the BPO viable for the industry and will be a great tool for enhancing supply chain financing and as a replacement for low value Letters of Credit and Factoring. Unfortunately, the SWIFT TSU messaging system only sends and receives messages from Bank to Bank. The content of those messages is corporate information (POs, Invoices, etc.) which means that each bank must buy or build the component to translate corporate data into TSU format. Trick or Trade?

The corporate world has worked hard over the years to take cost out of their supply chains starting with processes like JIT (Just in Time) and vendor management. The area now that they will be focusing on is their Financial Supply Chain. The convergence of the Physical and Financial Supply Chains is the next logical step. Unfortunately, the market has little in available solutions to assist corporations with this goal. Banks believe that it is about rates and the money side without realizing that what keeps corporate CEOs and CFOs up at night is the fear of supply chain disruption. Banks must make it simple for corporations to connect and converge their financial data into their existing physical supply chain data in order for the ability to make real time decisions that are actionable.  Trick or Trade?

Happy Halloween!