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STEPS General introduction

STEPS General introduction

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    General intro General intro Presentation Transcript

    • TitleOverview 4-Oct-11 Copyright TradeRiver Finance Ltd. 2009-2010 All rights reserved Intro
    • 2 What is STEPS? STEPS is an on-line system which provides secure business finance / supply chain lending to trade Buyers and accelerated, non-recourse working capital to trade Sellers. Transactions are negotiated and executed online entirely on STEPS, using the simple STEPS process, which mitigates or removes the majority of risks associated with receivables finance. We provide significant benefits to buyers and sellers:  Buyers are provided with a balance sheet neutral trade credit limit, rather like a credit card;  Buyers can use that credit limit with any Enrolled supplier and can choose any credit; repayment term of up 120 days credit on a transaction-by transaction basis;  Sellers benefit from 100% non-recourse cash payment immediately the Buyer accepts the goods and his payment obligation;  STEPS transaction costs are low;  The STEPS process is simple, secure and efficient. We also provide an attractive channel for Credit Insurers and Funders to distribute their products in a controlled, scalable manner. “One day, all trade transactions will be executed this way”4-Oct-11 www.traderiversteps.com
    • 3 Why STEPS? Any company which purchases or supplies goods or services is involved in a “supply chain”. Supply chains can be long or very short (two counterparties - “trade finance”). The mechanics of supply chains are frequently complex, inflexible and fragile. Each link in the chain requires working capital to maintain, is often a major contributor to a company’s running cost and is frequently the limiting factor for growth. STEPS reduces or removes the working capital tied up in a supply chain altogether. And does so quickly, simply and cost-effectively. “One day, all trade transactions will be executed this way”4-Oct-11 www.traderiversteps.com
    • 4 TradeRiver’s competitive advantage There are four key aspects:  Finance availability and procedural integrity are superior to those currently available.  Risk mitigation is maximised for liquidity providers, Sellers and Credit Insurers – their interests are uniquely aligned.  The process is simple, web-based, scalable and cost-effective.  STEPS is fully transparent, being updated and managed in real-time.4-Oct-11
    • Using STEPS 5  Authorised Signatories have secure access by USB security token on any computer  STEPS has clear user screens and is easy to use, having a standardised process, unparalleled security and rich record-keeping and reporting capabilities 4-Oct-11 www.traderiversteps.com
    • 6Why is STEPS attractive to Buyers?  Transactions are funded within the transaction value;  Once enrolled on STEPS, transactions are executed with no paper documentation;  Competitive all-in transaction pricing lowers the cost of goods or services;  Extended credit up to 120 days available for all transactions - the payment term can be chosen to suit Buyers’ cash flow requirements;  Provides off balance sheet finance and should not affect existing banking arrangements;  No other security required;  No set up or registration costs ;  The transaction execution process is completely transparent;  Potential for improved margins;  Removes need for letters of credit, guarantees, credit confirmations, bank loans etc.;  Enhances trading relationships by accelerating seller’s cashflow;  The exchange of goods-related documentation (bills of lading etc.) can continue as normal – through STEPS if desired;4-Oct-11 www.traderiversteps.com
    • 7Why is STEPS attractive to Sellers?  STEPS relies on the Buyers financial standing, not the Seller’s;  Immediate, 100% cash settlement without recourse when the Buyer accepts the goods/services;  Highly cost-effective when compared with current methods of finance;  Savings can be used to extend credit terms elsewhere in a Seller’s business;  Releases and accelerates working capital ;  Any transaction size within the Buyer’s credit limit is permissable - financing large transactions is therefore possible;  Does not require a Seller credit assessment;  No setup or registration costs ;  Improved margins ;  The transaction execution process is completely transparent;  Removes exchange rate risk (payment made in transaction currency) ;  Removes need for letters of credit, credit confirmations, guarantees etc. ;  Potentially improves trading relationships by enabling Sellers to introduce Buyers to attractive extended payment terms. Additional benefits for a company using STEPS as both Buyer and Seller:  By using STEPS to finance the supply chain, working capital constraints can be either eliminated or much reduced;  For example, a Seller can achieve 100% cash in from its Buyer(s) before having to pay its suppliers.4-Oct-11 www.traderiversteps.com
    • 8 STEPS reduces or eliminates supply chain costs and accelerates payment; a simple example: Existing (open account) supply chain Terms of business Working Capital requirement Supplier(s) The Manufacturer pays the Supplier 28 days after the Supplier’s goods are accepted by 28 days the Manufacturer. Manufacturer Manufacturing time is 10 days. 45 + 10 – 28 = 27 days Retailer The Retailer pays the Manufacturer 45 days after the manufactured goods are delivered to the Retailer.  Both Supplier and Manufacturer fund their working capital requirements with bank overdrafts The Supplier enrols on STEPS as a Seller, the Manufacturer as Buyer STEPS terms Working Capital requirement Supplier(s) Paid immediately the Buyer accepts the goods. Nil Manufacturer The Manufacturer as Buyer elects to take 60 days’ credit from TradeRiver. Nil He receives payment from the Retailer 55 days after receipt of the Suppliers’ goods, but can wait to pay TradeRiver for 60 days The Manufacturer is thus paid by the Retailer before he has to settle with TradeRiver. Retailer The Retailer pays the Manufacturer 45 days after manufactured goods are delivered to the Retailer.  STEPS has removed 55 days’ working capital requirement from this simple supply chain4-Oct-11 www.traderiversteps.com
    • 9 STEPS economics  The value of a transaction is separated into two constituents: “Transaction Charge” and “Net Transaction Value”  Net Transaction Value – Paid in full without recourse to the Seller when the Buyer accepts the goods  Transaction Charge – Fee paid to TradeRiver when the Buyer accepts the goods - Typically 3 – 7 bps (0.03% - 0.07%) per day - Inclusive of funding cost, credit insurance, and all operational expenses - Varies with credit period and Buyer country In this example Transaction, the economics are: Transaction Value: USD 100,000.00 Transaction Charge: USD 3,191.11 Net Transaction Value: USD 96,808.984-Oct-11
    • 10Who can enrol on STEPS? Buyers  STEPS relies on the buyers financial standing, Buyers must have at least two years’ trading history and financial details. TradeRiver establishes Buyer credit limits prior to enrolment;  STEPS is global, and Buyers can be established in most major jurisdictions;  Once enrolled, Buyers can execute transactions with any enrolled Seller who is not an associated party of the Buyer. Sellers  STEPS is Buyer-centric, and any properly established company can enrol on STEPS as a Seller  Once enrolled, Sellers can execute transactions with any enrolled Buyer who is not an associated party of the Seller.4-Oct-11 www.traderiversteps.com
    • 11 The STEPS Process  Every Transaction follows an identical series of steps Buyer and Seller enrol with STEPS Step 1: Seller & Buyer input initial transaction details Step 2: Seller requests transaction approval Step 3: TradeRiver Approves the transaction Step 4: Seller Despatches the goods Step 5: TradeRiver activates the transaction, allocating funds Step 6: Goods delivered to Buyer Step 7: Buyer inspects and accepts the goods Step 8: Seller issues a Payment Obligation Step 9: Buyer accepts the Payment Obligation (liability to pay) Step 10: TradeRiver Confirms Payment Obligation Step 11: TradeRiver pays Seller without recourse Step 12: Buyer settles liability with TradeRiver4-Oct-11
    • 12 STEPS Operational Participants  TradeRiver UK, London: Centralised administration and marketing office. Manages and monitors all aspects of TradeRiver operations in close liaison with the Fiduciary Services Provider. TradeRiver UK has a Service Agreement with, and is a significant investor in TradeRiver Finance Limited.  TradeRiver Finance Limited: (Guernsey) is a GFSC regulated company that handles all monies transfer through a tax benign, secure “lock box” account. All funds movement is controlled by the Fiduciary Services Provider, under the terms of the Fiduciary Services Agreement.  Fiduciary Services Provider: The Fiduciary Services Provider (Ocra Isle of Man Ltd.) independently ensures the integrity and consistency of STEPS operations at all key Transaction stages, and monitors Transaction recovery.  The Insurer: Chartis (A+) provides global insolvency and protracted default protection for all transactions within its own credit limit matrix structure, Global Limits ManagerTM.  Funder(s): Provide transaction funding facilities under individual Fiduciary Services Agreements and Purchase Mandate Terms and Conditions. TradeRiver is currently finalising funding facilities with Santander Invoice Finance  Licensee(s): Lloyds TSB Commercial Finance have expressed strong interest in licensing STEPS on a white label basis to offer the system to their invoice discounting client base. TradeRiver will derive turnover-based royalty and annual licensing fees. HOT’s are drafted with LTSBCF.  Cash Management: A global, multi-currency cash management facility established with HSBC to accommodate the needs of STEPS participants, and to provide “lock box” security facilities.4-Oct-11
    • 13 Contact us TradeRiver Finance Ltd Granite House, La Grande Rue St Martin, Guernsey GY4 6LH. Tel : 0044 1481 728 360 info@traderiversteps.com www.traderiversteps.com TradeRiver UK Ltd. 107 New Bond Street London W1 1ED United Kingdom Tel: 0044 207 788 7690 info@traderiversteps.com www.traderiversteps.com4-Oct-11 Version 4.6 Dec 10