Improving the SMEs Access to Trade Finance DRAFT
in the OIC Member States
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related trade service processing and financing services a bank may provide. Additionally, these
definitions provide the necessary flexibility to encourage service customization and
differentiation, factors critical to ongoing trade services and trade finance evolution and
development.
Based on market feedback, BAFT-IFSA will build upon these definitions and will further
international standards and documentation to govern Open Account transactions among
financial institutions.
Section 2: Processing/Servicing Definitions
Open Account Processing leverages the existing trade services processing capabilities of
financial institutions. It can include purchase order upload to create transactions, document
examination and/or data matching, tracing and follow up for payment and payment services.
An important activity in Open Account transaction Processing is the exchange and sharing of
documents and document data which can be sent to a bank via a number of methods, including
paper documents and electronic records hereafter referred to collectively as documents.
These processing activities which are further defined below can trigger Supply Chain Finance
opportunities. A bank may engage in some or all of these activities and/or financing
opportunities.
1. Purchase Order Advice
A purchase order specifying the goods and terms is created by the buyer. The seller is then
notified of the purchase order and other shipping instructions through a collaboration
platform, fax, email, portal or other method. Once notified, the buyer may require the seller's
acknowledgement.
2. Document Checking and/or Data Matching
Documents are created and presented by the seller. Matching criteria under Open Account are
defined by the buyer. They may consist of simple checking for the presence of all the required
documents or detailed checking of specific data values within or among documents in an
automated, semi automated, or manual fashion.
3. Discrepancy Handling/Dispute Resolution
If the matching results include discrepancies between the buyer's matching criteria and the
presented document data, the buyer is typically notified to determine if the documents will be
rejected or approved. For efficiency purposes, the buyer can preauthorize the bank to pay
documents where there are no discrepancies. Dispute resolution enables buyers and sellers to
resolve disputes related to Open Account activity on-line or via other methods of
communication.