ec-Finance.com

Three New Online Tools Automate L/Cs and International A/R
Managing International Credit & Collections

August 2000

UPS Capital Corp., the financial services arm of the United Parcel Service, and ec-Finance.com have created new services that utilize the power of the Internet to streamline international credit operations.

The UPS services offer the benefit of putting credit in a position to help make a sale happen when the customer would not ordinarily qualify for open-account terms. Available through UPS's Global Trade Finance services in the United States and Canada, the services are called the Letters of Credit Service and Export Receivables Service. Both are available through an online trade finance system called ExchangeLane services.

New York-based ec-Finance.com (ECF), a developer of Internet-based international trade products, has launched an online letter of credit service- FastLC for B2Bs. The service provides access to ec-Finance.com's online database to each of the parties to a letter of credit.

New UPS Services
UPS's new products automate the management of trade finance by:

creating and managing letters of credit for export; financing the letters of credit; and providing export receivable services and financing to ensure prompt payment for exported goods.

The target audience for these new products is small and midsize companies. According to the U.S. Small Business Administration, the number of small businesses that export has tripled in the last decade, accounting for nearly 97% of the U.S. firms that now export.

Letters of Credit Services
The creation, inspection, and correction of errors in letters of credit often result in the seller not being paid through this means due to the huge amount of human intervention needed to perfect it. Often the review is left until the last minute, and then there is not adequate time to make sure the letter of credit conforms to the underlying documents. Through the ExchangeLane online system, UPS Capital's services serve both the seller on the advising side and the buyer on the initiating side by electronically automating the creation, execution, and management of letters of credit, thus providing a guarantee that an exporter will be paid for the goods by the importer.

The Export Receivables Service is targeted to exporters who will benefit from selling internationally on open-account terms.
"Creating letters of credit easily, cost-effectively, and accurately is absolutely critical to the success," says Bob Bernabucci, president, UPS Capital. "But today's manual creation and management of these letters is anything but easy, cost-effective, and accurate. . . . Our letter-of-credit products enable global commerce by allowing importers and exporters to streamline this process via their desktop PCs or company computer networks-giving them an advantage over competitors who remain hamstrung by the arduous letter-of-credit process," he continued. The new services are actually two products in one, allowing both the exporter and the importer to better manage the payment process. These include:

ExchangeLane L/C Advisor. This allows an exporter to create a single, secure database of all outstanding letters of credit, no matter how many advising banks are used. The exporter can then efficiently monitor the status of collections, identify discrepancies, and quickly resolve them.

ExchangeLane L/C Initiation. This service enables importers to prepare, with their bank, letter-of-credit applications quickly, accurately, and securely by eliminating the need to re-enter the same information for each letter initiated.

The two products also offer common benefits for both exporters and importers, including:

Flexible applications that enable multiple users-including third parties such as freight forwarders-to collaborate in real time on the preparation of key documents. Data can also be imported or exported into related applications, such as spreadsheets or presentation programs.

Intelligent, intuitive software that anticipates each step in the L/C process and reduces the time and resources wasted performing repetitive tasks.

Personalized databases that allow each user to customize reports in numerous formats and prepare reports at any time.

Export Receivables Services
How often does the sales department bring a transaction to credit that does not meet the company's standards for open account? Or, even if the potential customer does meet the standards, there may be a disagreement over the terms, with the buyer looking for longer terms than the credit professional is comfortable granting. The Export Receivables Service is targeted to exporters who will benefit from selling internationally on open-account terms. This service provides exporters with risk mitigation, collection, and accounts receivable financing. The Export Receivables Service is also supported by UPS Capital's ExchangeLane system.

The service enables the seller to receive payment within days of the goods being shipped. This translates into more flexible terms and expanded opportunities for sellers and exporters to sell on open account. Through UPS Capital's multiproduct online system, ExchangeLane, the Letters of Credit Service is combined with the Export Receivables Services. Businesses can benefit from having all international invoices and receivables handled by one service provider in one place.

"This offering is consistent with UPS Capital's core goal of supporting our customers' global growth plans by delivering flexible, innovative solutions to their capital-formation needs," Bernabucci says. "We see all of these products as being closely aligned to UPS's core mission of enabling global commerce."

International credit professionals who are interested in learning more about these services can point their browser to www.upscapital.com, or contact Irene Moore at imoore@ups.com or 404-828-6571.

ec-Finance.com Services
With the ECF system, buyers and sellers meet on a B2B exchange and agree to terms. Terms are conveyed to ECF. Using ECF partner banks, they can then manage the L/C process entirely online. Here's how the 14-step process works:

Buyer and seller meet on a B2B exchange, usually a Web site such as Commodinet.
Buyer reviews merchandise offered and identifies merchandise desired.
Buyer and seller agree to price, delivery, and terms.
A sale transaction is completed.
Transaction details are passed to ec-Finance.com.
ECF prepopulates the L/C application with transaction data.
Buyer completes the remaining L/C data.
Buyer selects executive bank from ECF bank partners.
ECF passes the data to the bank.
Bank receives and reviews application. If OK, bank sends wire instructions to buyer.
Buyer wires funds to bank.
Bank issues L/C to initiate payment (contingent upon term compliance) to seller.
Buyer and seller are e-mailed status of L/C.
Buyer and seller monitor L/C status via Web site

International credit and collection managers interested in using the system for their company's letter-of-credit needs can contact ec-Finance.com at 212-532-6184; fax: 212-532-6137; e-mail: info@ec-finance.com; Web site: www.ec-finance.com.

For complete article please visit: www.ioma.com/nls/corpfinance.shtml?micc_08_00

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