Commerzbank’s Angela Koll discusses the rise of the BPO in Treasury Today

angela-kollIn an interview with specialist financial publication, Treasury Today, Angela Koll, Vice President, Specialist Trade & Supply Chain Finance at Commerzbank, sets out the reasons why banks and companies are making ever greater use of the ‘Bank Payment Obligation’ (BPO).

A BPO is a digitalised trade instrument that electronically matches data on trades, invoices and counterparties in order to ensure payments. A hybrid instrument, positioned between the more common tools of trade finance – the letter of credit and open account – it offers a good balance between the priorities of the buyer and the seller.

In the article, ‘The BPO breaks new ground’, Koll shows that the BPO offers practicability, efficiency and flexibility to trade finance transactions, explaining that it mitigates risk, meets growing corporate demands for digitalisation, and can improve profitability in the long term.

Koll is optimistic for the BPO’s future, suggesting that, in addition to bringing advantages to trade finance, it also holds potential for “enhancing” supply chain finance: “By improving a supplier’s cash flow, it can reduce risk and safeguard all parties’ future business.”

Yet Koll points out that there is still work to do to bring the BPO to the fore, adding that, “Initiating a BPO transaction remains a comparatively new process for banks and corporates. There still need to be more banks ready for the BPO to increase its use around the world. This will take time because its benefits and processes need to be explained and fully understood.”

The article comes hot on the heels of two landmark BPO transactions for Commerzbank. The first, in August, was the export of automotive materials from Italy to Ireland – the first BPO facilitated by Commerzbank’s UK office. The second, this September, saw the bank’s Frankfurt office process the import of chemicals from China.

Please read the article online here.

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