Benefits of BPO
– Payment assurance and increased flexibility
Because BPO is an irrevocable payment undertaking by a bank, it provides
payment security at the outset – when purchase order data is agreed and the
established baseline is set. BPO mitigates risks not only through guaranteeing
payment, but also through the specification of an irrevocable payment date.
BPO also provides a degree of flexibility to the counterparties. The established
baseline of data allows the conditions of the payment, including the shipment and
payment date, to be specified by both the seller and the buyer. Amendments can be
agreed upon within a short period. In this way, both parties are afforded more
transparency over the trade and their cash management, thus improving the capital
cycle.
Moreover, thanks to the Fast and flexible digital matching processes based on the
Transaction Matching Application, trade documents are sent directly by the
supplier to the buyer. This means the buyer can receive the documents prior to
