Trying to do this through traditional methods has been complex and daunting. Trying to do it online has been near impossible.
“We saw this as an opportunity to add real value to a problem that has been unchanged for hundreds of years. TradeCard initially developed an online alternative to the letter of credit that would make this entire process faster, easier, less expensive and more secure. There are many companies in the market that have developed online letters of credit or letter-of-credit applications, but most of them just replicate the offline process. We now have over 400 global users settling through transactions through TradeCard and they’re doing it for much less than they were before and gaining more benefits than they had ever realized,” said Michael Klausner, Vice President of Marketing, TradeCard Inc.
TradeCard however, has a patented compliance engine that does all the checking of documents automatically. If there are discrepancies, buyer and seller can negotiate these online and resolve them immediately. This online processing saves a considerable amount of money and time. The payment assurance that a seller would normally receive from the bank that issues the L/C is provided by Coface, the world’s largest export credit insurance company, one of TradeCard’s core partners.
One of the reasons this process has been such a challenge is that involves disparate parties and paper-based methods that make things complex and fragmented. Companies do not have visibility into their transaction and as a result lose valuable information as to the status of their goods and payment. TradeCard solves these issues by enabling all parties to a transaction to participate through a single platform where data can be exchanged, approved, amended in real-time 24 x 7.
Within the workflow exists a TradeCard-patented data compliance engine that electronically compares information requested against information presented so decisions regarding the transaction can easily be determined.
Through TradeCard’s transaction management processes, users have access to tools that align the “touch points” of their financial supply chain with those of the physical supply chain. TradeCard electronically facilitates the data critical to ordering, credit management, terms, document management and cash management through a single process. Additionally, payment can be queued for either automatic processing or final approval by the buyer, who then decides how much and when to pay.
These settlement functions accommodate transactions that are credit assured or open, automated payment or payment instructed by the buyer, individual or bundled payments.Other very real problems that companies are facing currently with respect to their Financial Supply Chain are that many sellers do not have visibility into their cash flows and as a result they do not know when customers are going to pay, particularly when there are disputes. On the buyer’s side, the problem is that buyers need more information about when they should pay.
All transaction data are stored in the TradeCard system and all parties of a transaction can see the status of a transaction at any point. This means they can also see when problems arise and resolve them. This transparency means that a seller can see when he will receive the money and the buyer knows when he should pay.
According to Forrester Research, Internet transaction services last year focused on proving that financial transactions over the internet Internet were trustworthy and secure. Now, there is an evolution towards aggregated services, or suites of products, because users do not want to deal with a multitude of different suppliers. For example, a company does not want to adopt the processes of one payment service for one particular type of transaction and then engage a wholly new provider for different types.
As a result of customer demand, TradeCard now enables all transaction types (see above)from domestic to cross-border on its platform, including guaranteed international and open account. TradeCard’s continually growing network of service partners also ensures that TradeCard follows the trend envisaged by Forrester Research, and offers one suite of products that fulfills all of their customers’ requirements so that they don’t have to deal with 10 or more different companies for one transaction any longer.
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“TradeCard has not focused on specific industries as the platform is suitable for many verticals. However, some of our members come from the electronics industry as well as apparel, footwear, toys and sporting goods. While TradeCard follows a very strict data privacy code, so we can only mentionthe few that have been a handful ofmentioned include. The client list of more than 120 member companies includes Radioshack RadioShack in the US and SK Global and LG International in Korea,” Michael Klausner revealed.
Buyers and sellers must first apply to become members. They go through a detailed background check and once approved they get security identifiers that enable them to log in to the system. Users can go directly to the site and key-in their data or TradeCard can integrate directly with their back office systems to upload and download the data. As with all new processes, customers are dipping their toe in the water before they take the whole plunge. After a few settled transactions they have been finding that companies then begin to expand their use of the solution and spread it out to their additional vendors.
TradeCard claims to have over 400 users coming from 120 companies that use their hosted-platform to initiate, conduct and settle transactions.
Another business model is where a buyer and seller can just use the TradeCard hosted services to manage their transactions. This is priced on a per transaction basis and this platform is also available to entities wishing to enable transactions for their own users. These customers could be banks, e-marketplaces or even corporates. Companies can brand these platforms with their own look and feel and even control pricing so it can serve as an additional revenue model.