Skip to content
PALBON-SuitesComplete ERP Solution

Facilities, funding and hedging

Bank facilities hold the limits your banks give you; every live credit reserves its maximum amount on one, and every change is kept as an exposure movement. Funding requests ask several funders for the cost of financing a credit or receivable and pick the cheapest. Hedge contracts record FX and commodity hedges with their mark-to-market.

1. Bank facilities

Trade Finance › Banking › Bank Facility (/palbon-trade-finance/facilities).

1.1 Create a facility

  1. New. Facility Name (for example Meridian LC Line), Bank, Company, Facility Type (LC Issuance, Guarantees, Trade Loan, Receivables Discounting), Valid From / To.
  2. Currency and Limit (for example USD 40,000,000).
  3. Save. The facility starts in Draft.
Step Action Who
Draft Submit for Approval Treasury Manager, Trade Finance Manager
Pending Approval Approve (not the requester) → Active; Reject → Draft Treasury Manager
Active Suspend Treasury Manager, Trade Risk Manager
Suspended Reinstate (not the requester) Treasury Manager
Active / Suspended Mark Expired Treasury Manager

1.2 Utilisation

Utilised, Available and Utilisation % are worked out from the maximum amounts (amount plus tolerance) of the live credits on the facility: Issued, Advised, Amended, Presented, Discrepant and Accepted. A credit that would take the facility past its limit cannot be approved or issued.

1.3 Exposure movements

Trade Finance › Banking › Exposure Movement is the facility's ledger, written by the app (nobody edits it):

Movement When
Reserve A credit becomes live: its maximum amount
Increase / Decrease A confirmed amendment changes the amount: the difference only
Release The credit is paid, closed or cancelled

Each movement shows the facility, the credit, the date, the amount, the credit's exposure after it, and why.

Trade Finance › Reports › Facility Exposure shows each facility's limit, utilisation and headroom. By voice: How much headroom on the Meridian facility?

2. Funding requests

Risk & Treasury › Treasury › Funding Request: ask funders for the cost of financing one asset and award the best offer.

  1. New. Title, Trade, Letter of Credit (when financing a credit), Financing (LC Discounting, Pre-shipment Finance, Post-shipment Finance, Receivables Factoring, Payables Finance, Trade Loan), Currency, Amount, Tenor (days), Day Count, Requested On, B/L Financed.
  2. Send to Funders (Treasury Manager or Trade Finance Manager) and send the request through your usual channel.
  3. As offers arrive, add one row per funder in Offers: Funder, Type (Bank, Fund, Factor, Group Entity, Other), Base Rate % p.a., Margin % p.a., Fees, Advance %, Valid Until. The request moves to Offers Received.

  4. The app prices each offer:

    all-in cost = amount × advance % × (base rate + margin) × tenor / day basis + fees
    all-in rate = all-in cost ÷ funded amount × day basis ÷ tenor

    Lowest Cost and Lowest All-in Cost name the cheapest offer.

  5. Tick Awarded on the chosen offer and click Award (a Treasury Manager, not the requester). Then Close when it is repaid, or Cancel.

Double financing: one bill of lading may back only one live financing. A second request on the same B/L Financed shows a warning, and the daily fraud sweep raises a Double Financing trade alert.

Example: discounting the sale credit of USD 3,984,542.10 for 30 days, Actual/360. Three funders quote; the cheapest all-in cost is USD 20,022.32, and it is awarded.

3. Early-payment discounts

A discount matrix gives an annual rate per band of days paid early. On a commercial settlement, choosing the matrix and Pay Early On applies:

discount = settlement amount × band rate × days early / 360 (or 365)

4. Hedge contracts

Risk & Treasury › Treasury › Hedge Contract.

  1. New. Title, Trade, Instrument (FX Forward, FX Option, Commodity Swap, Commodity Future, Commodity Option), With Bank, Direction (Buy, Sell), Underlying (for example USD/INR, API2 Coal, LME Copper), Notional and Notional Unit, Contract Rate, Dealt On, Matures On.
  2. Market Rate Today: the current rate. Mark-to-Market = notional × (market − contract), positive for a buy when the market is higher; for an FX pair it is in the quote currency (MTM In).
  3. Workflow:
Step Action Who
Proposed Submit for Approval Trader, Treasury Manager
Pending Approval Approve and Book (not the requester) → Open; Return for Changes Treasury Manager
Open Settle or Cancel Treasury Manager
Proposed Cancel Trader, Treasury Manager

Open FX hedges on a trade reduce its Open FX Exposure (see Trades).

Example: buy USD 20,000,000 against INR at 83.10; market today 83.55 → mark-to-market INR 9,000,000.