CargoDocs Bank Payment Obligation Plus (BPO+)
CargoDocs BPO+ combines ICC-approved Bank Payment Obligations (BPO) with the use of data from the CargoDocs platform, streamlining and automating the creation of BPO Baselines and Dataset submission between Corporates & Banks.
It provides all users with the intuitive CargoDocs User Interface familiar to our customers, and maximizes the re-use of data contained in the solution to provide ISO 20022 tsmt data to those who need it – namely, Banks.
The result: Limited human intervention with elevated data security and integrity throughout any given transaction.
CargoDocs Bank Payment Obligation Plus (BPO+) functions as an out-of-the-box BPO solution for both Corporates & Banks.
It enables Corporates to apply for BPO and to agree a Baseline with their Banks and customers, and Sellers to feed the final Datasets with source data from original electronic documents.
All Baseline and Dataset data is provided to the banks as ISO 20022 tsmt messages for use with TSU.
For customers using electronic Bills of Lading, the original eB/L can be held in escrow until a BPO match is achieved. This provides Sellers with the confidence that cargo cannot be released until the document data has been processed by the Banks and TSU, while Buyers can rest assured that the documents relate exactly to the goods described in the Baseline.
CargoDocs BPO+ functionality includes:
- Web-solution managing all aspects of a BPO transaction, namely:
- Ability to create BPO application and submit to own (Obligor) Bank
- Ability for own Bank to accept application and agree Baseline with the customer’s counter-party and their Bank
- Ability for Seller to submit the commercial and transport Datasets from source data – including original eB/L and Commercial Invoices – to the Sellers Bank and, in turn, SWIFT TSU
- Management of all exception scenarios and message interfacing with SWIFT TSU throughout the BPO process
- All messages between CargoDocs and the Banks are created and transmitted as ISO 20022 tsmt messages
- Automatic auditing of all events and user actions
- 12 year online archiving of all eDocs
- Customer onboarding and support managed by essDOCS
According to a 2014 EBA report*, BPO ‘combine(s) the security of Letters of Credit with the simplicity of Open Account trading’. Here’s how:
- Potential for delays or interpretation is eliminated as data is matched by an independent transaction matching application (SWIFT TSU)
- Probability of a data mismatch is reduced as Buyer and Seller’s relevant data will have already been agreed upon to create Baseline in the TMA at the outset, thus creating certainty, visibility and efficiency
- Upon data match, the process can be entirely automated and virtually instantaneous, with no judgement involved so no scope for interpretation
- Payment Risk Mitigation for the Seller: the irrevocable payment undertaking by the Obligor Bank, and if requested, the additional silent confirmation of the Seller’s Bank, ensures payment at the due date
- Shipment and Performance Risk Mitigation tool for the Buyer: Based on trade data matching, the Buyer benefits from a predetermined shipment date and flow of information regarding the delivery of goods
- Working Capital Management: Confirmed maturity of payment allows improved working capital and less time expenditure on tracking outstanding payments. Possible financing of BPO allows for an increase in DPO for the Buyer and significantly reduced DSO for the Seller
- Liquidity: both the Buyer and Seller can approach their Banks to use BPO to generate liquidity from appropriate use of credit lines and employment of Supply Chain Finance instruments pre and/or post shipment
- Process Optimisation: electronic handling of data and electronic communication over a central platform means that processes (e.g. amendment of shipping terms) and payment can be accelerated and optimized
*Euro Banking Association ‘Supply Chain Finance European Market Guide (2014): Towards a clear conceptual language and common set of definitions for SCF / 3.7’
CargoDocs BPO+ can be adopted as a Standalone Entry Solution to facilitate speedy and easy implementation, without any development costs or risk on the part of either Corporates or Banks. Alternatively, Banks with an existing BPO solution can adopt CargoDocs BPO+ as an Add-On Solution with the capability of offering the final data submission and eB/L escrow only.
At it’s core, our solution is designed to work as a 4-Corner Model, extending the application form and baseline acceptance beyond the standard TSU messages, and incorporating both the Buyer and Seller in the process. This approach maximises straight-through processing, while eliminating errors and delays resulting from data re-entry.
At our customers’ request, we are currently developing a 2-Corner Model to enable transactions for an even broader range of parties.
In addition, while BPO+ was initially designed to be used with eDocs, customer demand has led us to extend the solution for use with paper documents – where those paper documents are created/drafted in CargoDocs DocHub – allowing for broader BPO usability by also enabling non-CargoDocs users to automate their BPO transactions.