An Importer’s View: Efficiency and Differentiation Make a Compelling Case for the BPO
An interview with Stefanie Stanzel, Vice President Commercial, Polytrade Global GmbH
The Bank Payment Obligation (BPO) offers a range of benefits to suit companies moving from a variety of settlement options and perspectives. One perspective that is often overlooked when it comes to the BPO is that of the importer. Polytrade, a global supplier of raw materials, additives and marketing services, however, has considerable experience using the BPO to settle its import business. Stefanie Stanzel, Vice President Commercial, Polytrade Global GmbH, answers questions about Polytrade’s experience with the BPO – including the advantages for importers, the benefits of switching from letters of credit, and the value of a strong banking partner to help smooth the process.
Why did you decide to switch to the BPO?
When UniCredit – one of the leading market players in terms of implementation and coverage of the BPO – approached us about using the instrument to settle trades with a Thai supplier, we were immediately interested. With BPO settlement becoming increasingly popular throughout Asia, we felt we could gain a competitive advantage by including it in our portfolio of payment options – especially since it would position us as one of the first such companies not only in Germany, but also in Europe. Furthermore, this was a chance for us to gain experience in this new settlement method – giving us an insight into how it works and the advantages and disadvantages of offering it to our suppliers and customers.
“When partnering with corporate companies, every deal is different. We understood the particular complexities and challenges that would affect the BPO transaction between Polytrade and its supplier. And this understanding, combined with our considerable knowledge and experience with the BPO, meant we were confident we could be an effective partner for this transaction – guiding Polytrade through every step, and providing them with the tools to execute quickly and simply.”
The advantages of the BPO are usually given from the point of view of the exporter. Having used the BPO as an importer, what do you see as the benefits from this perspective?
Of course, exporters stand to gain a great deal from using the BPO – particularly in terms of financing, risk mitigation and balance sheet optimisation – but it is also a highly valuable instrument from the importer’s perspective. The benefits here come primarily from the speed and simplicity of its processes – helped by its digital compatibility. These have enabled us to optimise our processes and costs, saving time and money when compared to our previous settlement process using letters of credit.
Are there particular advantages when moving from settlement via letters of credit?
Yes – the BPO’s simpler documentation and processes bring a number of advantages for firms switching from letters of credit. For a start, the whole process is much faster, as documents are exchanged digitally and sent directly to us, rather than taking regular detours via the two mediating banks. On top of this, UniCredit offers an intuitive online tool that makes it easy to track the progress of a payment throughout its life cycle.
And, what’s more, there is no fee for verifying documents – making the BPO a more cost-effective option when compared to letters of credit. This confers a considerable competitive advantage, particularly for companies in low-margin industries such as the commodities business.