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Treasury and finance · Contingent Liabilities (rm.TradeFinance)

Letter of credit and bank guarantee management

Request and track letters of credit, bank guarantees, surety bonds and comfort letters from request to expiry.

RiskWorks 13 · Instruments
Outstanding126
Expiring in 60 days11
Banks and sureties14
Standby letter of creditExpires in 30 days
Expiring
Performance bondProject complete
Released
Bank guarantee (EUR)Amendment requested
Pending
Customs bondRenewed
Current
Sample data

The problem

Letters of credit, guarantees and bonds are requested by email and tracked in spreadsheets across banks, sureties and countries. Treasury can’t see total outstanding exposure by bank or currency, renewals and fees slip by, and instruments that should be released stay open and tie up credit lines.

Where it hits your total cost of risk
  • Premiums32%Not directly affected.
  • Retained losses62%Not directly affected.
  • Cost to manage risk6%In this example, collateral costs such as letter of credit and bond fees run about $78,000 a year, plus about 70 staff hours managing the instruments.

Typical split from the Risk Diagnostic’s example: a public agency with a $1.2 billion budget. Take the diagnostic and this chart shows your own numbers.

What it does

Request workflow

Business units request instruments with the approvals you require.

Instrument register

Every letter of credit, guarantee and bond in one place.

Expiry and fee alerts

Advance notice of expiries, renewals and fees.

Exposure reporting

Outstanding amounts by bank, surety, beneficiary and currency.

Global operations

Manage instruments across operations and jurisdictions from one dashboard.

Bank integration

End-to-end integration with your global relationship banks and regional branches.

82 currencies

Instruments in any of 82 currencies, converted with managed exchange rates.

Full record and reporting

Every action and message between your team and outside parties is logged, and ad-hoc reports give real-time contingent liability, process and performance data.

How it works

  1. 1Instrument requested
  2. 2Approved and issued
  3. 3Tracked and amended
  4. 4Released or renewed

What to expect

4–8 weeksTypical rollout, from kickoff to go-live
$2MLower bank fees in the first year (Tyco, 2006)
2x fasterRequest to issuance, first nine months (Tyco, 2006)

Who uses it

Treasury and finance teams that manage letters of credit, guarantees and bonds across banks and sureties.

Exigis’s work for Tyco won Treasury & Risk’s Alexander Hamilton Award in Technology.

Questions

Does it handle several banks, sureties and currencies?

Yes. Instruments are tracked across banks, sureties and jurisdictions, in any of 82 currencies with managed exchange rates.

Can business units request instruments?

Yes. Requests go through the approvals you set before they reach the bank or surety.

Related

Bank Account Tracking

Manage global bank accounts, signers and authorities with multi-currency support and approval workflows.

Learn more

The RiskWorks platform

The platform every application runs on: workflows, rules, hierarchies, documents and audit trail.

Learn more

What does tracking contingent liabilities cost you?

The free Risk Diagnostic measures the effort behind your letters of credit, bonds and guarantees, compared with your industry. Then review it with an Exigis analyst at no cost.