Newsletter
TradeCard News - December 2004
Financial Supply Chain Automation - The Hosted way to Procure-To-Pay
Welcome to TradeCard's monthly e-mail newsletter - a summary of the latest news from TradeCard.
To read this newsletter in other languages, please click here:
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In our fifth installment of "Principles of Global Trade," we discuss more effective management reporting
through electronic document management. Each month's principle is based on our members' experiences.
We'd love to hear from you. Send trade tips, suggested topics, or questions for our management
team to sales@tradecard.com
NOTES FROM THE ROAD: RICHARD LIGHTBOUND -- DIRECTOR, BUSINESS DEVELOPMENT, EUROPE -- DISCUSSES
THE TREND TO OPEN ACCOUNT TRADING RELATIONSHIPS
HEADLINES: RECENT ARTICLES THAT HAVE FEATURED TRADECARD
EVENTS: UPCOMING TRADESHOWS, CONFERENCES, WEB SEMINARS AND MORE
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PRINCIPLES OF GLOBAL TRADE * PRINCIPLES OF GLOBAL TRADE *
This is the fifth installment of our ten-part series.
PRINCIPLE 5: Easy reporting makes global trade processes transparent
With paper documents, managers and their staff must re-key and collate the same data in order to generate reports,
but with electronic documents, reporting is a powerful and easy-to-use function. Compared to paper transactions,
electronic documents offer much greater visibility into transaction status, and vastly improved reporting
possibilities.
When your key documents, from purchase order, to shipping papers to invoice, are in electronic format, all
partners to a transaction who use a web-enabled global trade management system, gain real-time visibility into
transactions. The key, however, is to use the internet for all data management - an ERP system, for example, that
manages communication between only two parties at the time, is limited in the insight it offers into the
transaction cycle from purchase order to settlement.
In a web-based system, all data that refer to the current transaction can easily be viewed by buyer, supplier,
logistics company and financial institution - essentially every party to the transaction that is authorized.
Managers and their staff no longer waste time on information gathering. Instead, managers can view or print
reports of key performance indicators and status reports, and spend their time more usefully on strategic
planning and decision-making, creating a competitive edge for their company. Greater visibility into accounts
payables and receivables results in better cash management, and monthly books can be closed sooner, because
accounts and data from global trading activities are available in one place and in real-time.
- Maximize process automation with electronic documents
- Employ data inheritance to avoid re-keying documents
- Open a real-time window on trade transactions
- Use reports to improve trade process management
- Practice strategic analysis to obtain a competitive edge
NOTES FROM THE ROAD * NOTES FROM THE ROAD * NOTES FROM THE ROAD *
This month, Richard Lightbound, Director, European Business Development, discusses the trend toward open account
relationships - a much-debated issue.
Last week, I met with the head of supply chain management for a well-known European sports apparel and footwear
brand. He told me that one of his biggest headaches is the time it takes to manage all the paper documents in
their transactions with global suppliers. The company recently changed the payment terms with all their suppliers
to open account in order to save costs, but in reality these costs have not gone away - they've simply become
less visible.
Instead of paying Letter of Credit fees to the bank, the company now incurs indirect costs through managing paper
documents in-house. Purchase order and shipping documents need to be matched manually to detect discrepancies,
and invoices need to be reconciled against payments made. The company is expanding fast, which means this paper
mountain will only grow. At the same time, many suppliers are not happy without any form of payment protection.
This is a typical situation for a lot of companies, particularly if they work with suppliers in China. Many small
and medium-sized Chinese suppliers feel they have no way to recoup their money if the overseas buyer does not
pay.
Financial supply chain technology now provides the means to give suppliers payment protection while
maintaining open account relationships. And, of critical importance to the supply chain chief I met with,
documents can be managed electronically and automatically checked for compliance. This creates a win-win
situation that is important to all buyers who are keen to improve the relationship with their suppliers.
For instance, in the case of TradeCard customer based in Turkey, it now takes only one person to prepare the
payment documents instead of the two or more needed when all documents were paper-based. One person now handles
and completes about 300 sets of shipment documents per month and has time to complete other tasks as well.
No matter which technology provider you choose, a good service should include automated compliance checking and
discrepancy resolution, which is a key element in the provision of payment protection and one area where a
significant amount of time and cost can be cut out of the transaction cycle.
To learn more about TradeCard's automated document management with credit protection, go to http://www.tradecard.com/what/financial/credit.html
.
HEADLINES * HEADLINES * HEADLINES * HEADLINES * HEADLINES * HEADLINES
Recent TradeCard headlines with some article excerpts:
- Not Sewn Up - November 29, 2004 - Journal of Commerce Online
This article discusses the impact of the end of textile quotas starting in January 2005:
For many multinationals that buy from several countries, the end of quotas will lower costs in another way: It
will enable them to consolidate their supply sources and tighten their supply chains. "We used to source in
50 countries because of the quotas," said Gary Ross, vice president of worldwide operations at Liz
Claiborne. "Quotas meant we had to spend 45 percent of our time on figuring out the rules and regulations
and limits of the quotas. Now without quotas, we'll be able to cut the sourcing down to 10 to 15 countries and
save a lot of time." He expects his company to save 8 percent on import costs.
Ron Schulman, vice president of strategic sourcing at Limited Brands, also cited the benefit of tighter supply
chains. "Prices will drop, but the biggest impact will be an improvement in speed to market," he said...
Although the end of quotas will mean simpler, leaner supply chains - and more reliance on China - this doesn't
mean textile firms will be placing all their eggs in the Chinese basket. Kurt Cavano, chairman and chief
executive of TradeCard Inc., predicted that newly developed textile-manufacturing plants in such countries as
Vietnam and Cambodia will continue to receive their share of orders from U.S.-based buyers. Most of the companies
that use TradeCard's automated trade services are in the textile-and-apparel sector. "Our guys are pretty
excited about business in Vietnam," Cavano said, describing a recent trip by his staff to textile suppliers
there.
- West Coast ports brace for further congestion; The end of textile quotas is likely to exacerbate an
already chaotic January - December 6, 2004 - South China Morning Post
This article talks about the capacity problems of West Coast ports in the US and how they are likely to cope when
imports from China and Asia as a whole will increase further in 2005:
"Industry players project that a flood of garment shipments will jam ports on the United States west coast
this January, the month global quotas on textile imports end. A surge in garment exports is contributing to
congestion at Pearl River Delta seaports and even air cargo terminals in Hong Kong. "For air freight, we
still see a lot of backlog. There is a substantial increase this year in air freight for all kinds of goods,
including garments," said Cliff Sullivan, air freight director of Kerry Logistics (Hong Kong).
The jam had resulted in delays of up to one week for air cargo from Hong Kong to North America, he said. There
were similar backlogs in air freight in Taiwan and the mainland, said Mr. Sullivan.
"We're seeing a lot of our customers air freighting high-end garments to meet deadlines," said Kurt
Cavano, chairman [and CEO] of TradeCard, a US technology and services firm that automates supply processes.
"There will be a lot of shipments in the first three weeks of January," said Willy Lin Sun-mo, vice-chairman of the Hong Kong Textile Council. Garment manufacturers were unable to ship more before January because they
could no longer "borrow" next year's quotas as the quotas would not exist after January 1 next year, he
explained. A five-month period of backlogs on the US docks has only recently begun to ease. To get around the
jam, goods were shipped to Canada and Mexico, then transported by train and truck to the US.
"When so much of US buying is concentrated in one country, China, this one shipping lane gets jammed,"
Mr. Cavano said.
- China trade - October 2004, Finance Asia
This article discusses how trade financiers are working to alleviate the risks associated with trading with China - both from the buyer and the supplier point-of-view.
Performance risks are now being amplified as importers and exporters reduce their dependence on letters of credit
(LC) and move towards trading on open account. While much of the cross border trade with China is still conducted
under LC, influential buyers from the US and Europe are now demanding that suppliers accept purchase orders as
sufficient payment guarantee. This is creating anxiety of both sides, says Robert Lin, vice president of
TradeCard in Asia. "Foreign buyers are often worried about performance and delivery risk surrounding Chinese
buyers, but on the other hand Chinese suppliers have also been burned in the past so there is nervousness there," says Lin, "Chinese suppliers are concerned about whether they are going to get paid by the buyer and about
how they might pursue the buyer if they don't get paid."
(Of course, the same legal recourse risks apply to foreign companies selling to Chinese buyers. While some foreign
firms have been successful in chasing debt through the Chinese courts, collecting on that debt hasn't been so
easy.) Lin says the other problem Chinese suppliers have with open account trading concerns financing options.
"The Chinese are concerned about the financing implications of open account trading. It is much easier to
get financing on the back of a letter of credit than on an open account order. The rates for this type of vendor
financing are very high."
Other TradeCard headlines included:
- Foreign managers confident in Taiwan's future development - November 29, 2004 - Liberty Times (in Chinese)
- Taiwan becomes major market for financial supply chain management - November 24, 2004; DigiTimes (in Chinese)
- TradeCard promotes safe electronic platform for international trade - November 23, 2004 -Taiwan Shin Sheng Daily (in Chinese)
- TradeCard cooperates with 7 banks to provide online fund flow - November 23, 2004; Economic Daily News (in Chinese)
- Online financial supply chain provider TradeCard to expand into Europe - November 23, 2004; China Daily (in Chinese)
EVENTS * EVENTS * EVENTS * EVENTS * EVENTS * EVENTS * EVENTS * EVENTS
In the coming month, TradeCard will participate in:
January 17-19, Orlando, Florida.
Kurt Cavano will present two sessions at the International Business Intelligence Series at The Supershow, one of
the major sporting goods shows in the USA. For more information, please go to http://www.thesupershow.com
January 21, Hong Kong.
TradeCard will participate in an E-business seminar organized by GS1 Hong Kong (previously
known as Hong Kong Article Numbering Association).
This newsletter can also be viewed at the Hong Kong General Chamber of Commerce website at
http://www.chamber.org.hk/hknewsletters/
