The Guide uses real-life examples, diagrams and expert advice to explain the URBPO, a new set of rules on payments between banks that ICC’s Banking Commission launched last year in partnership with financial messaging provider SWIFT. The text of the book covers not only the rules but also the messaging standards, the role of the transaction matching application, the workflow and selected examples of relevant business scenarios to support a variety of value propositions.
Its author is David Hennah, Member of the Institute of Financial Services (UK), head of trade at Misys and a member of the ICC Drafting Group that worked on the first draft of URBPO. Mr Hennah is highly experienced in the innovative use of new technology to support the delivery of value-added business solutions in international payments and cash management, trade and supply chain finance.
The ICC Guide to the Uniform Rules for Bank Payment Obligations examines how three critical components – standards, platform and rules – interact to contribute to the successful completion of a Bank Payment Obligation (BPO) transaction.
“This publication is essential reading for corporates, bankers, academics and other interested stakeholders engaged in the business of financial supply chain management,” said ICC Marketing Operations Manager Leïla de Sacy.
Trade finance: the next generation
Described by Mr Hennah as “the brainchild of bankers”, the BPO binds the issuing bank into paying another bank on a specified date once electronic data has been matched successfully. While letters of credit rely on checking paper documents, BPOs work in a completely automated environment. Used correctly, the BPO can mitigate risks associated with international trade, benefiting both buyers and sellers. They enable flexible financing propositions across the entire transaction lifecycle, including pre-shipment, post-shipment and buyer finance.
“The Bank Payment Obligation empowers us to take the business of trade finance to another level and to give birth to a whole new tradition for the next generation of trade financiers,” explained Mr Hennah.
The ICC Guide to the URBPO includes real-life business scenarios and practical examples to show how a BPO can be applied to support a variety of customer value propositions. It will help corporates take full advantage of a host of bank-assisted open account solutions designed to optimise the management of the cash conversion cycle and working capital.
“At a time of restricted risk management and lending practices, transaction bankers have an open opportunity and responsibility to guide their corporate clients to take advantage of new developments in best practice, such as those engendered by the introduction of the Bank Payment Obligation. Education and communication are of vital importance in assuring successful adoption,” said Gary Collyer, Chair, ICC BPO Rules Drafting Group, in his foreword to the guide.
“Works such as this Guide to the URBPO will help to extend knowledge, awareness and understanding as we look forward to the continued evolution of a next generation of financial supply chain solutions.”
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