While recognizing its importance to an efficient and effective trading process, for many trading firms it still takes a laborious and manual effort to know who their approved counterparties are, which products they can trade, and to access certification and compliance paperwork. The quality of products delivered as well as increasing food safety legislation, require proper controls to protect reputations and comply with regulatory rules. At the same time, when those controls are inefficient they will impact the business. In an age of digitalization, the successful commodity trading firms have automated this. Do you have your trading partners’ information and offering at your fingertips, or is this a Soft Spot for you?
Like any business, commodity trading firms are exposed to a variety of challenges and risks. The Softs commodity business operates in an international arena, with overseas trading partners in markets of different political environments. Knowing your counterparty is key to expect a consistent flow of quality products that comply with food and health regulations, and in the process not to lose sleep over payments.
Unfortunately, this means a lot of moving parts, paperwork to chase and tracking statuses. A Commodity Trading & Risk System (CTRM) is designed to help trading firms organize this, thereby improving efficiency substantially while positioning the company to grow and be more competitive.
In a ‘nutshell’, a CTRM system eases trade entry, enforces checks and balances at every stage of the trade, automates counterparty documentation, streamlines logistics and improves tracking and accuracy of all settlements. It combines, what you may call your Warehouse Management System capabilities, with specialist commodity trading functions, including position and risk management, flexible logistics and provisional invoicing, as well as the Customer Relationship Management (CRM)-like functionality, that we call Counterparty Management.
Counterparty Management allows capture of all the required details of the companies you are trading with, or have traded with, as Counterparties can be active or inactive in your system. It includes general contact information, individuals, bank information, credit terms, and items to enable automation for sending invoices. Moreover, all the master contracts are listed, of which a physical copy can be stored/uploaded for viewing, with their specific attributes that apply to the associated trades linked to such master contract. In addition, the Counterparty Management allows to capture the list of products that are available from or required by this counterparty. This way, knowing what products from what sellers have been approved by what buyers, becomes an easy task.
Within an easily navigable screen, the user can click on each product to see all the particular specifications. Powerful search and filter options allow the trader to quickly find the counterparties for the products he is looking for. Stored certificates are at the user’s fingertips to view via hyperlinks.
By leveraging workflow, calendar and alert notification capabilities, tasks can be setup to be completed by staff and remind them on status, thereby taking full advantage of automation for maximum efficiency to ensure that the company complies with internal and external regulations, while optimizing its trading and logistical process.
A front-to-back integrated CTRM system delivers detailed insight and full control in your commodity trade chain. It enables greater efficiency with reduced trader’s time on routine tasks, from deal capture to invoice status. It accommodates improved process control for supplier approval and product grading, while optimizing the management of documents, certificates and specifications. As a result, a CTRM system will improve your insight & control, increase revenue, reduce cost, and manage your risks.