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PALBON-SuitesComplete ERP Solution

Example: a back-to-back coal trade, end to end

This example takes one back-to-back trade through every step: offers and confirmation, both contracts and their addendum, both letters of credit and their amendments, the vessel, the statement of facts and laytime, both surveyors and both document sets, the presentation, both settlements, the invoices and the payments. Every figure is worked out the way the app works it out.

The demo site holds this trade as T.0101 Steam Coal Northwind / Deccan with all its records, so you can open each one beside the step that made it (see First-time setup). To practise, repeat the steps on a new trade with the same values.

1. The deal

Your company (PALBON DEMO LLP) buys Indonesian steam coal from a supplier and sells the same cargo to a power producer in India.

Purchase leg Sale leg
Counterparty Northwind Resources Pte Ltd (supplier) Deccan Power Generation Ltd (buyer)
Cargo 75,000 MT ±10% Indonesian Steam Coal, GCV 4,200 kcal/kg ARB The same cargo
Terms FOB Samarinda, discharge any safe port in India FOB Samarinda
Price (agreed) USD 49.26 per MT USD 49.89 per MT
Price after addendum ADD I USD 51.72 per MT USD 52.39 per MT
Quality pricing Adjusted price = actual GCV × base price ÷ 4,200; reject below 4,000 The same, but no bonus above 4,300
Laycan, loading rate 16-22 Sep 2026; 12,000 MT per day SHINC The same
Demurrage / despatch USD 16,500 / 8,250 per day USD 16,500 / 8,250 per day
Payment Letter of credit, 7 days from documents sighting; presentation 7 days from B/L Letter of credit at sight; presentation 14 days from B/L
Surveyor Archipelago Survey Services Meridian Marine Inspection
Bank Meridian Trade Bank issues the purchase credit (facility Meridian LC Line) Sterling Continental Bank issues the sale credit; Orient Pacific Bank advises it

Goods and documents move from the supplier to you to the buyer; money moves back under each credit.

2. The timeline

Date (2026) Contract Trade finance Shipping Documents
11-13 Aug Offers and confirmations
18 Aug Both contracts drafted and shared
21 Aug Both contracts signed
3 Sep Sale credit received and advised
6 Sep Purchase credit issued Vessel Ocean Pride nominated by the buyer
7 Sep Nomination passed to the supplier
13 Sep Work orders to both surveyors
14 Sep ADD I: prices up Both credits flagged for amendment
15 Sep Holds inspected and clean; vessel accepted
16-20 Sep NOR, free pratique, loading
21 Sep Deadlines set from the B/L B/L BL/0101/2026, 76,230 MT Certificates issued
24 Sep Sale documents presented Drafts approved; NN copies e-mailed
25 Sep Originals couriered
28 Sep Purchase presentation deadline NN-copies deadline
30 Sep Sale credit paid
5 Oct Sale presentation deadline

3. Masters (once)

Before the trade, an administrator makes sure these exist (see First-time setup):

  1. The item Indonesian Steam Coal GCV 4200, unit MT.
  2. Supplier Northwind Resources Pte Ltd, customer Deccan Power Generation Ltd, surveyors Archipelago Survey Services and Meridian Marine Inspection (suppliers), banks Meridian Trade Bank, Sterling Continental Bank, Orient Pacific Bank.
  3. Ports Samarinda (Indonesia) and Krishnapatnam (India); vessel Ocean Pride (IMO 9800013, post-Panamax bulk carrier, 87,000 MT deadweight, built 2015, ISM compliant, P&I Gard, class DNV). All vetted and approved.
  4. Laytime rule set SHINC WPD (coal, Indonesia): SHINC; once on demurrage always on demurrage; never counting Waiting Free Pratique, Initial Draft Survey, Intermediate Draft Survey, Final Draft Survey, Shifting, Weather Stoppage.
  5. Price formulas Coal GCV pro rata (base_price * actual / basis, basis 4,200, reject below 4,000) and Coal GCV pro rata, cap 4,300 (the same with No Bonus Above 4,300).
  6. Contract template Bulk Coal FOB.
  7. Bank facility Meridian LC Line, USD 40,000,000, Active.
  8. Counterparty profiles of both parties, onboarded and screened clear.

4. Flow 1: the trade and the contracts

Step 1. Offers and confirmations (Trader)

  1. Trading › Deals › Trade › New. Title T.0101 Steam Coal Northwind / Deccan; Trade Type Back-to-Back; commodity, 75,000 MT, tolerance 10%, quality basis GCV 4,200 kcal/kg ARB, Incoterm FOB, load port Samarinda, discharge port Krishnapatnam, laycan 16-22 Sep 2026, currency USD.
  2. Legs: Purchase with Northwind at 49.26, payment terms LC Usance, surveyor Archipelago Survey Services; Sale with Deccan at 49.89, LC at Sight, surveyor Meridian Marine Inspection.
  3. Offers and confirmations: each leg's first offer (status Countered) and the accepted one (Accepted, with the e-mail recap as evidence).
  4. Save. Margin per Unit 0.63; Expected Margin USD 47,250.

Or say: Create a back-to-back trade of 75,000 MT steam coal from Northwind at 49.26 to Deccan at 49.89 USD, answer the questions, and confirm.

Step 2. Business confirmed (Trader, then Trade Finance Manager)

  1. Submit for Confirmation.
  2. A Trade Finance Manager opens it from What is waiting for me? and clicks Confirm. The trade is Confirmed.

With the shipped automations switched on, confirmation drafts a contract for each leg, a surveyor work order for each leg and the purchase credit.

Step 3. Draft contracts shared (Contracts Executive)

  1. Open the purchase leg's draft contract (from the trade's leg, or Contracts › Commodity Contracts › Purchase Contract). Contract No. P/0101/2026, template Bulk Coal FOB (its clauses fill in with the contract's values), price formula Coal GCV pro rata, laytime terms SHINC WPD (coal, Indonesia), load rate 12,000 MT per WPD, demurrage 16,500, despatch 8,250, presentation 7 days, governing law English law, arbitration LMAA London.
  2. Quality Specification: VM 38-42% ADB; FC by difference; GCV ARB 4,200 kcal/kg, Reject Below 4,000, Adjusts Price; HGI 45 min; size 0-50 mm 90% min; AFT-IDT 1,120 °C min.
  3. Documents Required: commercial invoice 1+3, B/L 3/3+3, certificates of sampling and analysis, weight and origin 1+3 each.
  4. Do the same on the sale contract S/0101/2026, but with the price formula Coal GCV pro rata, cap 4,300 and presentation 14 days.
  5. Actions › E-mail the draft to the counterparty on each, then Share with Counterparty.

On save, each contract lists its deviation from the other leg: Bonus cap (quality): sale 4,300, purchase none, Critical. Needs Deviation Approval is ticked.

  1. On the sale contract write the Deviation Justification: Sale leg caps the quality bonus at 4,300 kcal/kg; purchase leg does not. Accepted: the cap limits only our upside on the sale.
  2. Request Deviation Approval.
  3. The Legal Manager reviews it, ticks the deviation approved, and clicks Approve Deviation. The contract returns to Shared.

If a counterparty asks for changes on the way, click Record Query or Amendment, note them in Requested Amendments, change the terms and Share Revised Draft.

  1. Finalize both contracts. Their agreed terms are now locked.
  2. Collect signatures: upload each scan in Signed Copy (or Actions › Send for e-signature).
  3. The Legal Manager clicks Mark Signed. Signed on 21 Aug 2026.

Step 6. Addendum ADD I (14 Sep)

Coal indices moved; both counterparties agree new prices.

  1. On the purchase contract add an Addenda row: ADD I, effective 14 Sep 2026, Term base_price, Old 49.26, New 51.72, status Signed. Save: the base price becomes 51.72, the contract value USD 3,879,000, and the purchase credit is flagged Amendment Pending.
  2. On the sale contract: ADD I, 49.89 → 52.39; contract value USD 3,929,250; the sale credit is flagged.
  3. Optionally rename the contracts P/0101/2026 (ADD I) and S/0101/2026 (ADD I).

The margin moves from 0.63 to 0.67 per MT.

5. Flow 2: trade finance

Step 1. Sale credit received (3 Sep; Trade Finance Executive)

  1. Paste the advising bank's MT700 into a new SWIFT Message (Incoming), save, and Actions › Apply to the letter of credit.
  2. The credit OPB/EX/26/0101 opens as Export (Sale): applicant Deccan Power Generation, beneficiary your company, issuing bank Sterling Continental Bank, advising bank Orient Pacific Bank, USD 3,741,750 (75,000 × 49.89), tolerance 10%, available by negotiation, at sight, partial shipments and transhipment not allowed, issued 3 Sep, presentation 14 days from B/L, expiry 2 Nov 2026, discrepancy fee USD 100 per set, the 46A list and the 47A clauses.
  3. Set its Trade. The check against the sale contract runs: Matches.
  4. Record Advice of Received LC: the credit is Advised.

Step 2. Purchase credit drafted and checked (Trade Finance Executive)

  1. Open the draft purchase credit (from the automation, or create it): Import (Purchase), applicant your company, beneficiary Northwind, USD 3,694,500 (75,000 × 49.26), tolerance 10%, usance 7 days from documents sighting, presentation 7 days, latest shipment and expiry after the laycan, bank facility Meridian LC Line.
  2. Set Back-to-Back Pair on both credits. With the copy rule on, the sale credit's 46A documents and 47A conditions are copied into the purchase credit, so the supplier's documents will also pass under the buyer's credit.
  3. Actions › Check against the contract: matches the purchase contract.
  4. The Maximum Amount is 3,694,500 × 1.10 = USD 4,063,950 (after the amendment: 3,879,000 × 1.10 = USD 4,266,900); the facility has room for it.
  5. Print › LC Application, send it to the supplier for review.

Step 3. Bank quotes and issuance (Trade Finance Executive, Trade Finance Manager)

  1. Seek Bank Quotes, add each bank's quote; the all-in costs are worked out; tick Selected on Meridian Trade Bank's.
  2. Submit for Issuance Approval. A second Trade Finance Manager clicks Approve Issuance (the maximum amount is below 5 million).
  3. When the bank issues it, enter LC number MTB/LC/26/0101, issue date 6 Sep 2026, and click Record Bank Issuance. The facility reserves the maximum amount (an Exposure Movement, Reserve).
  4. Actions › Write the MT700 keeps the issued text as an outgoing SWIFT message.

Step 4. Amendments after ADD I (Trade Finance Executive)

  1. On the purchase credit (Amendment Pending): Actions › Propose amendment from the contract adds amendment 1: amount 3,694,500 → 3,879,000 (+184,500), status Requested. Request Amendment.
  2. The bank's MT707 arrives: apply it, or set the row to Bank Confirmed. The amount becomes USD 3,879,000; the facility exposure increases by the difference only. Record Bank Amendment.
  3. The sale credit: the buyer amends it to USD 3,929,250 (+187,500); record the advised MT707 and Record Advised Amendment.

Step 5. Deadlines (21 Sep)

When shipping records the B/L dated 21 Sep 2026, both credits get their dates: the purchase credit's presentation deadline 28 Sep (7 days), the sale credit's 5 Oct (14 days). Reminders go to trade finance three days before each deadline. Credit Deadlines shows both.

6. Flow 3: shipping

Step 1. Nomination (6 Sep; Logistics Coordinator)

FOB terms: the buyer charters and nominates the vessel; you pass it on to the supplier.

  1. Shipping › Vessels › Vessel Nomination › New: Ocean Pride for T.0101, trade T.0101, vessel Ocean Pride, nominated by Buyer (set from FOB), laycan 16-22 Sep, ETA 15 Sep, cargo 75,000 MT ±10%, maximum vessel age 20.
  2. The checks run: age within 20 years, ISM compliant, P&I Gard, class DNV, deadweight 87,000 MT enough for the cargo with tolerance (82,500 MT): All charter-party checks passed.
  3. Pass the nomination to the supplier: Passed to Supplier On 7 Sep. Request Acceptance.

Step 2. Clean-vessel acceptance (15 Sep; Shipping Manager)

  1. The purchase leg's surveyor inspects the holds: clean, previous cargo corn in bulk, cleaned by sweeping, sea-water wash, fresh-water rinse and drying. Record the Certificate of Hold Cleanliness as a trade document and link it on the nomination with the inspection time.
  2. The Shipping Manager (not the coordinator who asked) clicks Accept Clean Vessel. The voyage Ocean Pride - T.0101 is created by the rule.

Step 3. Voyage and statement of facts (16-21 Sep; Logistics Coordinator)

Move the voyage through Proceed to Load Port, Arrive at Load Port, Start Loading, and log the events (by screen or by voice: Log NOR tendered for Ocean Pride at …): arrived and anchored, NOR tendered (16 Sep 17:06), NOR accepted, free pratique granted, hold inspection passed, initial draft survey, loading commenced, loading completed, final draft survey, documents on board (B/L issued), sailed.

Step 4. Loading completed (21 Sep)

  1. B/L Number BL/0101/2026, B/L Date 21 Sep 2026, B/L Quantity 76,230 MT (from the final draft survey).
  2. Complete Loading and Sail. Both credits receive the B/L date (flow 2, step 5).
  3. On the trade, Mark Shipped.
  4. FOB: freight is the buyer's (Not Applicable (FOB)); no freight invoices.

Step 5. Load-port laytime with the supplier (Logistics Coordinator, Shipping Manager)

  1. Shipping › Laytime › Laytime Calculation › New: T.0101 load port laytime with the supplier, voyage, Load Port, settled with Supplier Northwind, contract P/0101/2026, terms SHINC WPD; cargo 76,230 MT, rate 12,000 MT per day, NOR tendered 16 Sep 17:06, USD, demurrage 16,500, despatch 8,250.
  2. Save: the statement of facts becomes intervals. Mark what does not count: turn time after NOR, arrival before laycan, waiting for free pratique, the draft surveys; for the export documents, count only the last 1h 20m of the 13h 20m.
  3. The result:
    • Allowed = 76,230 ÷ 12,000 = 6.3525 days = 6d 08h 27m
    • Used = 3d 19h 25m
    • Saved 2.543472 days × USD 8,250 = despatch USD 20,983.65
  4. The supplier billed USD 20,983.63 on its despatch note (rounded from the minutes): enter it in Amount Agreed with Counterparty; the difference of −0.02 is kept.
  5. Submit for Approval; the Shipping Manager Approves.
  6. Actions › Raise the debit / credit note records the supplier's debit note to you for USD 20,983.63. Print › Laytime Statement for the file.

The despatch goes on the supplier's invoice, as the purchase credit's 46A asks (flow 5).

Step 6. Discharge

At Krishnapatnam: Arrive at Discharge Port, log the discharge events, Start Discharging, Complete Voyage. A discharge-port calculation with the buyer is made the same way if your sale contract settles laytime at discharge.

7. Flow 4: documents

Step 1. Surveyors and work orders (13 Sep; Documentation Executive)

  1. Two work orders (from the automation, or new): Purchase leg inspection T.0101 to Archipelago Survey Services (job JO-0101-PUR) and Sale leg inspection T.0101 to Meridian Marine Inspection (job JO-0101-SAL), each linked to its leg's credit.
  2. Scope: sampling and analysis, weight by draft survey, draft survey report, hold cleanliness, certificate of origin; 1 original and 3 copies each. Analysis Parameters Allowed from 47A: VM, FC, GCV (ARB), HGI, Size (0-50 mm), AFT-IDT. Instructions: no consignee, notify party, LC number, issuing bank or price on the certificates.
  3. Actions › E-mail the work order to the surveyor, Send to Surveyor, later Record Acceptance and Complete.

Step 2. Document instructions (Documentation Executive)

  1. Two instructions (from the rule when each credit is issued or advised): Purchase leg documents T.0101 (beneficiary type Supplier) and Sale leg documents T.0101 (beneficiary type Company).
  2. Each copies its credit's 46A list and 47A rules. B/L instructions from the buyer: consignee To Order, notify Deccan Power Generation Ltd, Chennai, Freight payable as per Charter Party, HS code 2701.12; non-negotiable copies within 5 working days of shipment to the credit's address.
  3. Print › Document Instructions, send the purchase leg's to the supplier. Send Instructions.

Step 3. Drafts received and checked (21-23 Sep)

  1. Record the drafts as trade documents: the shared B/L; each surveyor's certificates of sampling and analysis, weight, draft survey, hold cleanliness and origin; the supplier's invoice and beneficiary's certificate; the supplier's despatch note.
  2. The certificates of sampling and analysis: purchase leg GCV (ARB) 4,036; sale leg GCV (ARB) 4,190 (the two surveyors' results differ).
  3. Drafts Received, then Actions › Check the documents on each set. The purchase set finds:
    • Consistency, Discrepancy: the despatch note quotes B/L BL/0101/26, the B/L reads BL/0101/2026. Ask the supplier to correct it (a B/L number is never accepted as a typing error).
    • Rejection Limit, Warning: GCV 4,036 is within 2% of the 4,000 rejection limit. Not rejectable; it passes to the settlement's price.
  4. The sale set finds a 47A Rule discrepancy: the certificate of origin was received as a photocopy. The surveyor issues the original, recorded as version 2; version 1 is Superseded and its approval no longer stands.
  5. When clean, Route for TF Approval.

Step 4. Approvals (24 Sep)

  1. Trade finance checks the drafts against the credits and clicks Approve (TF) (not the person who routed them).
  2. E-mail the drafts to the buyer; on its confirmation, Buyer Approved.
  3. Request Finals.

Step 5. Your own documents, NN copies and originals (24-25 Sep)

  1. Sale leg: after the sale settlement (flow 5), Actions › Prepare our invoice and certificate creates your commercial invoice SINV/0101/2026 for USD 3,984,542.10 and your beneficiary's certificate; Actions › Draw the bill of exchange draws the draft at sight on Sterling Continental Bank for the same amount.
  2. E-mail the non-negotiable copies: due 28 Sep (B/L date + 5 working days), sent 24 Sep. Fill NN Documents Sent.
  3. Courier the originals to the negotiating bank on 25 Sep: AWB-0101-P and AWB-0101-S.
  4. Issue Final Documents on both sets.

8. Flow 5: settlement, presentation and payment

Step 1. Settlements (24 Sep; Trade Finance Executive)

Purchase settlement T.0101 (supplier's invoice PINV/0101/2026):

Line Working USD
Base value 76,230 × 51.72 3,942,615.60
Quality adjustment 51.72 × 4,036 ÷ 4,200 = 49.70; 76,230 × (49.70 − 51.72) −153,984.60
Despatch Agreed laytime result +20,983.63
Total 3,809,614.63

Rejection limit: Close to Limit (warning only). Within the credit's maximum of 4,266,900.

Sale settlement T.0101 (your invoice SINV/0101/2026):

Line Working USD
Base value 76,230 × 52.39 3,993,689.70
Quality adjustment 52.39 × 4,190 ÷ 4,200 = 52.27; 76,230 × (52.27 − 52.39) −9,147.60
Total 3,984,542.10

Within the sale credit's maximum of 4,322,175.

Submit for Approval; a Trade Finance Manager Approves each.

Step 2. Invoices

Actions › Make the invoice on each: a draft Purchase Invoice from Northwind for USD 3,809,614.63 and a draft Sales Invoice to Deccan for USD 3,984,542.10, in USD at the day's rate, with GST applied by the site's rules. An accountant submits them. Mark Invoiced.

Step 3. Presentation under the sale credit (24 Sep; Trade Finance Executive)

  1. On the sale credit, Present Documents.
  2. LC Presentation › New: presentation 1 under OPB/EX/26/0101, presented by Us (Beneficiary) on 24 Sep, amount claimed USD 3,984,542.10, courier AWB-0101, Full 46A set.
  3. The bank must examine by 1 Oct (five banking days). Start Examination; clean: Accept.
  4. The bank pays at sight on 30 Sep, deducting USD 6,850 of charges: Bank charges deducted 6,850, Net Proceeds USD 3,977,692.10, Amount Paid and Paid On. The presentation is Paid; the trade's bank charges become 6,850.
  5. Accept Documents and Record Payment on the credit, then Close it.

Step 4. The supplier's presentation and payment

The supplier presents its set under the purchase credit by 28 Sep. Record it the same way (Supplier (Beneficiary)), examine it against the same rules, and when accepted your bank pays the supplier 7 days from sighting. Record the payment and close the credit; its facility reservation is released.

Step 5. Payments in the books

On each settlement, after the invoice is submitted: Actions › Record the payment makes the draft Payment Entry, referenced to the credit's number. An accountant submits it. Record Payment on the settlement.

Step 6. The result

USD
Sale settled 3,984,542.10
Purchase settled −3,809,614.63
Gross margin 174,927.47
Bank charges and fees −6,850.00
Realised margin 168,077.47

The contract spread was only 0.67 per MT (USD 50,250 on 75,000 MT). Most of the margin came from the two surveyors' different GCV results and the despatch. On the trade: Settle, then Close.

9. What to look at afterwards

  • Trading › Reports › Trade Register: the trade with its expected and realised margin.
  • Trade Finance › Reports › Facility Exposure: the facility after the release.
  • Administration › Workflows › Workflow History: every step of every record, with who and when.
  • Administration › Audit › Trade Audit Entry: the tamper-evident trail of every change.