September 2004
Welcome to our latest edition of International Insights, a monthly summary of trends to know and tips you can implement to make your trade services business run more smoothly. This month’s edition describes online services that can automate many of your letter of credit and trade document processing tasks.
Increase efficiency with online trade tools
In today’s fast-paced international business environment, foreign trade managers face two major challenges in processing letters of credit (L/Cs) and other trade documents. First, foreign trade transactions require an overwhelming amount of paper documentation to manage. These include L/C applications and copies, cover letters, purchase orders, packing lists and certificates. Manual preparation takes time and care, and the process is prone to errors. The other major challenge is tracking and reconciling payments. Your staff may spend substantial effort requesting payment updates and transaction confirmations. Waiting for faxed or mailed L/C reports to arrive from the bank further delays reconcilement and analysis. Fortunately, today banks offer online services or software that enable you to reduce paper handling and retrieve timely payment information. Automate your L/C process Whether you’re an importer or exporter, online systems can help speed preparation of your trade documentation. These services enable electronic creation and submission of import and export letters of credit and other trade documents via the Internet. Online systems feature customized template forms that can help speed processing when you are buying from an overseas vendor, for example. An importer can pre-format L/C templates with vendor name, address, merchandise description, frequently used clauses and phrases, and other repetitive information. Furthermore, you can build and store online a database of overseas vendors, overseas banks, freight forwarders, agents and other suppliers for later use. With one-time input, you have all the information you need in one place. These services also allow a user to create a new L/C from an old one, which helps reduce redundant data input in cases where the terms of the L/C remain the same for each shipment. Electronic L/C presentment In the future, electronic presentment of L/Cs may help eliminate even more paper handling. Exporters can structure their letters of credit to allow them to electronically present drawings and shipping documents, which then can be accessed by the banking system through a secure web site. In April 2002, the International Chamber of Commerce (ICC) published the Electronic Uniform Customs and Practice (eUCP) rules for electronic L/C presentations. The eUCP is a
supplement to the Uniform Customs and Practice 500 (UCP 500), the rules for letters of credit used by banks worldwide. Standards are now in place, but electronic L/C presentment has yet to enjoy widespread use. While foreign companies have fax and e-mail capabilities, many still do not have the technology necessary to create or view documents online. Timely payment information Online systems can help an organization obtain timely payment information and act accordingly. This streamlines payables and reduces delays commonly caused by information gaps. For example, importers can go online to view information on open letters of credit or payments in progress. They can view and approve a payment from any computer with Internet access. Likewise, exporters can check on the status of an export collection using the Internet. Still other services automate the reconcilement process. Some banks will deliver to customers a daily electronic file with deposits matched to the corresponding L/C payments. This eliminates manual reconcilement, telephone calls and waiting for bank statements. Many online services offer comprehensive reporting as well, enabling a user to go online to view transaction history and generate reports. Finally, some banks can provide clients with CD-ROMs that store electronic images of a month’s worth of L/C or collection shipping documents. KeyBank’s online solution KeyBank provides electronic international trade services through its QuickTrade®/Web online channel. Clients can use the Internet to create documents, submit requests and retrieve transaction details for all international transactions. KeyBank is one of the few banks to offer an automated e-mail alert system with its online service to inform clients of completed activities, new events, transaction status and upcoming deadlines (including shipment and expiry dates). In addition, QuickTrade/Web offers sophisticated reporting, providing access to transaction information within an hour of when it takes place in the back office. To view a guided tour of QuickTrade/Web, visit us online at www.Key.com/international. For information about Key’s international products and services, visit us online at www.Key.com/International.
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