By Ian Kerr, CEO, Bolero International www.bolero.net
The ever-fluctuating properties of international trade often leave those making bold claims backtracking from their statements. However, it seems there is little risk in pointing out that recent statistics regarding overseas trade leave room for optimism. These statistics show that in September 2015, the value of UK exports increased 10 per cent from the previous month, to an astounding £25.9 billion. The Q2 figures were similarly positive, with exports increasing by £3.1 billion to reach £74.5 billion.
With many UK companies putting an emphasis on becoming more export-oriented, they are often discovering just how advanced their overseas counterparts, and counterparties, are in shifting to electronic trade platforms.
This disparity has sent many UK exporters seeking a platform to handle electronic presentation of trade documentation and automatic settlement in order to bridge the technological gap between them and the overseas companies they frequently do business with. It is, after all, time for UK exporters to catch up and seize the opportunities that digitisation is opening up.
A success story
A Brazilian sugar company recently experienced how digitisation can sweeten the deal last year when they utilised cloud-based messaging services to complete a shipment of sugar to a company based in Canada. The shipment was the first of its kind for the sugar industry, offering other exporters of the commodity a glimpse into the benefits of digitisation.
This deal was a landmark in the adoption of electronic document presentation (ePresentation) processes and electronic Bills of Lading (eBLs). Instead of resorting to slow and outdated trade finance workflows, these two companies, along with many others involved in exporting, are taking advantage of technology to both save time and simplify their operations. In doing so, these companies are avoiding the typical pitfalls and problems associated with manual documentation in shipping trade finance, while simultaneously embracing improved risk management and many other benefits.
The adoption of eBLs has been rising steadily. BIMCO, one of the world’s largest international shipping associations, officially adopted a new standard charter party clause for eBLs in May 2014. As with export companies using traditional Bills of Lading, protection and indemnity insurance (P&I) clubs cover the normal insurance liabilities of companies using eBLs, to the same extent as their paper-based counterparts.
By embracing an ePresentation system, export companies can greatly increase the speed of transactions carried out under a letter of credit or open account settlement. These electronic-based systems also eliminate the need for original paper documents to be shipped out, completely removing the risk of resulting errors and delays.
Since eBLs and other electronic documents are sent electronically, they can also be used by export companies and their partners to carry out a number of tasks, ranging from complicated letter of credit presentations and transactions to simple company-to-company invoices.
The cost-saving benefits of digitisation
With wildly fluctuating markets in some sectors, many companies are finding they must deal with forces that are outside their control. By stepping up internal processes through ePresentation, these same companies can soothe the resulting effects of market volatility.
Companies involved in export that have embraced digitisation can avoid the direct costs incurred by commodity firms and other enterprises when mandatory paperwork does not reach the recipient in time. With these costs out of the way, the exporter will find improved use of their working capital, hastened time-to-cash and more efficient credit line management.
With high-value consignments often trading for millions of pounds, going digital can go a long way in ensuring international companies boost visibility, management and control over their trade finance position. With the help of an ePresentation platform, these companies can improve compliance and transparency while also reducing the risk of fraud.
“The forefront of digital advances”
With the rate of UK exports increasing so drastically, and with more export companies jumping on board with digitisation, there has never been a better time for UK companies to embrace digitisation and adopt the digital processes that provide full management and communication of commercial trade finance instruments.
The Institute of Export, the professional body that helps UK businesses with international trade, has established its commitment to informing and educating the market about electronic options.
“The world is changing the way it is doing business and we are communicating to SMEs the importance of staying at the forefront of digital advances to gain competitive advantage,” says Lesley Batchelor, director general, Institute of Export. “There are concerns about cyber-security and having Bolero partner us in education and awareness-raising for exporters is invaluable to ensure these misgivings are dispelled before they lead to lost opportunities.”