Valve Solution for Banks
A letter of credit (L/C) is the classic product used by banks for event-based step-by-step payments in international trade. The underlying process is still very complex and manual today.
Often, internal costs are too high compared to the margin. Especially small trading volumes under EUR 1 million are not attractive for banks. In 45% of all cases, a requested letter of credit in the SME segment is rejected. According to a study by the ICC, the trade then often does not take place at all due to a lack of alternatives. Business growth is prevented. Furthermore, rejected letters of credit strain the relationship between bank and customer.
Up to 45% of applications for trade finance for SMEs are rejected.
Increase customer retention and profitability by using Cargodian.
Supplement Your Product Portfolio for International Trade Finance
Every rejected letter of credit is a setback for your customers in several aspects, but also for your bank: urgently needed goods cannot be purchased and prevent the growth of your customer. In addition, the customer relationship is strained.
Offer your customers a solution and strengthen your customer loyalty even if
- the credit limit is exhausted,
- the creditworthiness of the customer does not support a letter of credit or
- Internal costs for a letter of credit are too high compared to the margin.
No competition but Complement in International Trade Finance
Cargodian enters the trade as an intermediary (so-called cross-trader) and does not offer trade financing. The advantage of this business model is that Cargodian can execute the trade very fast and gains control over the goods. A letter of credit is not necessary. Cargodian controls every single step from shipment to delivery.
Cargodian’s stepping into the trade protects your customer without losing the customer relationship to his trading partner. Cargodian only acts in the background as a guardian of the goods and payment flows: “The Guardian of Cargo”.
Instead of pre-financing the entire trade transaction, several part payments are made to Cargodian, dependent on the progress of the delivery.
Cargodian ensures that payment to the seller is executed only after specific and verified events. By this, your customer’s money is well protected.
The entire cash flow from the trade is still handled from your client’s account. Your bank, in cooperation with Cargodian, can offer existing in-house trade finance products without having to deal with the trade itself: A true alternative to letters of credit.
Together, we offer a customized complementary product to your bank’s trade finance products.
Your Customer is The Focus
Advantages for the bank:
- Strengthen the customer relationship and offer the best solution for your customers.
- Support your customers on their growth path.
- All cash will still be handled by the bank.
- Financing and loans of the customer remain with you.
- Down payments from your customer can be handled fast on the basis of predefined financing models between the bank and Cargodian, providing the customer with needed liquidity.
- Fast support during the trade process ensures happy customers.
- Commission income while eliminating expenses for small letters of credit.
A real win-win situation for bank, customer and Cargodian.
