Andrew Raymond, CEO

The pandemic has certainly added to the pressures faced by treasury departments responsible for trade finance at major corporates. As well as fulfilling board-level expectations that they will drive change and provide more strategic insight, treasurers involved in global trade must now cope with an economic downturn and the constant threat of fraud.

Many treasurers know that this will be very difficult if they continue to use manual methods for complex workflows involving multiple systems. This is especially true in the management and optimisation of credit lines and important trade finance instruments such as letters of credit (LCs) or guarantees.

In December, before Covid-19 erupted, an HSBC survey found many corporate treasurers already felt ill-equipped to meet the demands placed on them. Now the pressures are even more intense.

Continued use of paper documentation for trade finance is hard to justify when the pandemic is giving a push to trade digitisation and multi-banking trade finance solutions such as Bolero’s Galileo platform offer transformative advantages in terms of efficiency, control and visibility.

Galileo will consolidate all a corporate’s credit lines, LCs and guarantees onto one interface so treasuries no longer have to manually access multiple bank portals (assuming their banks have them). It will also reduce the risk of involvement in fraud and forgery, which is such a significant problem it has led some banks to withdraw from involvement in commodity trade finance.

The oil trader Hin Leong in Singapore is, for example, alleged in court documents to have committed a major fraud using 58 import letters of credit that were not supported by any underlying transaction, along with forged bank statements, bills of lading, sales contracts and invoices.

By removing paper and vastly increasing visibility, Galileo would very substantially reduce the risk of being caught up in frauds of this kind. Paper documents are vulnerable – they can be forged when out of sight while couriered around the globe. Once a document is digitised on Galileo, however, forgery becomes extremely difficult because of encryption and audit trails. The electronic document remains completely visible at all time, but only to those engaged in the transaction, with the legitimate holder the sole party able to amend it.

Increasing the efficiency of each trade transaction through digitisation

The elimination of paper under LCs also reduces the chances of delays or failed transactions when, for example, deadlines for physical presentation to a prescribed location are not met. As treasury departments know well, LCs are notoriously complex instruments requiring close attention to detail and strict compliance with the rules governing their use. Thankfully, compliance-checking can also be automated in Galileo, which increases accuracy as well as saving time.

With Galileo, treasuries no longer log in and out of different bank portals to monitor what may be hundreds or thousands of LCs and guarantees each year. Through a single, interface that has been designed for ease-of-use and is packed with functionality, treasuries gain quick and easy access to all their banks, along with far greater control of individual LCs. This transforms how treasuries manage their relationships with their credit-providers and ensures they maintain important relationships with their preferred banks.

From the same platform, they can manage and edit all trade finance documentation and electronic presentations, as well as open account transactions and electronic bills of lading. Tracking and reporting is accomplished with a few mouse-clicks, while communications with banks remain encrypted and secure. This is a major advantage when remote working is on the increase in so many areas of the globe.

As the world changes, but the pressures intensify, there is an urgent need for treasuries to grasp digitisation for the optimisation of their trade finance operations. It makes the adoption of a multi-banking trade finance solution such as Galileo, the best move they can make.