Letters of credit (L/Cs) are on the decline according to a recent survey of corporate treasurers.

Respondents also said that banks are failing to deliver the integrated suite of products and services they reckon to offer.

L/C findings

Respondents to a Bank of America Merrill Lynch survey said the use of L/Cs when dealing with customers has declined, with only 16 per cent using them as their primary funding option.

Companies instead prefer open account terms. More than half the respondents to the survey said they used inter-company lending to finance capital requirements.

Other findings

The number of companies using the Chinese yuan for cross-border trade has doubled since 2013 to 35 per cent, according to a poll of 1,350 treasury professionals by Bank of America Merrill Lynch and software company, Sungard.

More than three quarters of respondents said they made payments into three or more countries while 86 per cent said having multiple bank relationships was an obstacle to efficient liquidity management.

Other surveys have shown that while banks market themselves as integrated, one-stop service providers, corporate treasurers find that this is not the case and they are forced to hold multiple bank accounts.

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