A New Jersey-based toy company has selected the cross-border electronic trade facilitator, TradeCard, to replace letters of credit (L/Cs) for trade purchases, particularly from Asia.

International Playthings believes the move will yield both process efficiencies and cost savings. "In Asia alone, we have 18 vendors who send us hundreds of shipments of toys annually using L/Cs" says the toy company's chief financial officer Michael Varda. He describes the documentary credit transaction as "a cumbersome process, which often involves frustrating and costly paper chases".

Benchmarking study

"We can see every step of a transaction through the TradeCard system, and as a result both manage our working capital better and rein in transaction costs," he adds. Tradecard claim that most domestic or cross-border trade transactions can be initiated, tracked and settled in their automated environment.

The company is now citing a recent Cap Gemini Ernst & Young benchmarking study of 150 large companies. The study found that those companies that automate the financial supply chain could save up to 50 to 100 basis points in process costs, including labour and fees related to purchasing, invoicing, accounts receivables, accounts payables, risk management and treasury management.

Since TradeCard was launched in April 2000 it has expanded its offerings beyond enabling cross-border trade transactions. It now provides a single platform over which the company claims virtually any type of domestic or international trade can be transacted.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.