26.05.2022
The International Supply Chain Financing transaction in the field of plastic product export is the first transaction realized in the field of interest-free finance in Turkey and in the world.
Turkey's leading participation finance institution, Kuveyt Türk continues to offer new opportunities to its customers with the products and services it has developed. International Supply Chain Financing, one of Kuveyt Türk's newest products in the field of foreign trade, offers exporting corporate customers a comprehensive service that combines collection management, correspondent guarantee and financing products for overseas deferred goods and service sales. Last year, Kuveyt Türk announced to the public that it was the first participation finance institution from Turkey to be accepted as a member of FCI, the umbrella organization of financial institutions providing guarantee and collection services for export receivables against goods. Kuveyt Türk made its first transaction within the body of FCI recently. The 'International Supply Chain Financing' transaction is the first transaction in the field of participation finance in Turkey and in the world.
“We support our exporters and facilitate their business processes”
The CEO of Kuveyt Türk Ufak Uyan said, “We develop innovative products and services in line with the principles of participation finance, taking into account the needs of our exporting customers that arise in changing and developing economic conditions. We move forward by focusing on production, export and investment and produce practical solutions for the needs of our export companies, which have strategic importance. In order to support our exporters, who make the biggest contribution to closing the current account deficit of our country, and to facilitate their business processes, we offered our International Supply Chain Financing product to our customers, which offers the seller the advantage of early collection and the flexible payment facility for the buyer. Last year, we announced to the public that we are the first participation finance institution to be accepted as a member of FCI, the umbrella organization of financial institutions that provide guarantee and collection services for export receivables against goods. Now, we have succeeded in being the first institution in Turkey and in the world to perform International Supply Chain Financing, according to the principles of participation finance, within the body of FCI. With this service, we offer our exporting legal customers a wide range of solutions that combine collection management, correspondent guarantee and financing products for overseas sales of goods and services. We will continue to develop innovative products and services for the sectors that are the locomotive of the country's economy and for exporting companies.”
How does the process work?
“Let's consider a Turkish company (seller) exporting plastic products. This company is participating in a fair in France and a French company (buyer) likes the products, but states that they can order on the condition that they offer 90-day cash against goods (open account). The Turkish company is cautiously approaching the French buyer to whom it will sell for the first time. The seller is looking for a way to perform the transaction safely and to meet the working capital requirement. At this point, the self-guaranteed International Supply Chain Financing product offered by Kuveyt Türk to its customers comes into play. The seller applies for a limit for the buyer by appointing Kuveyt Türk as a proxy for transactions. Receiving the request, Kuveyt Türk forwards the application to the correspondent organization in the relevant country. Following the evaluation of the correspondent institution, a guarantee limit is provided to the buyer by the correspondent. The warranty limit and conditions provided by the correspondent organization are notified to the seller by Kuveyt Türk. By securing the products to be exported, the seller accepts the terms presented by the buyer. Production starts with the agreement of the seller and the buyer. If the seller wishes to use financing and requests a proposal from Kuveyt Türk without issuing the invoice and without loading, in accordance with the principles of participation finance. Following the offer and acceptance, upon the completion of the financing offer process, the seller loads the product and assigns the invoice to Kuveyt Türk. According to the 90-day maturity agreed between the buyer and the seller, Kuveyt Türk buys the goods needed by the buyer in cash with the maturity and price determined from the seller, pays the price to the seller in cash, and sells the goods to the buyer. The correspondent organization collects the payment from the buyer and sends it to Kuveyt Türk's account when the 90-day maturity is due. Kuveyt Türk, who receives the price, collects its expenses based on this transaction and transfers the remaining amount to the seller's account. In case the buyer does not make the payment, the seller has fulfilled his obligations under the contract and has no negligence, no fault or shame, the payment is made to Kuveyt Türk by the correspondent institution +90 days after the due date, provided that the buyer does not put forward a dispute. Thus, Kuveyt Türk provides the International Supply Chain Financing service both by intermediating in the collection and securing of the export price and by providing financial support to its customers if needed. In this way, the seller, who is a Kuveyt Türk customer, achieves the guarantee, collection and financing functions in the export process with a single product.
Benefits of International Supply Chain Financing service to seller (exporter) companies
- Against the risk of non-payment of the receivable due to the buyer's insolvency and payment difficulties, 100% of the invoice amount is guaranteed within the limit.
- Receivable tracking and collection service is provided.
- Thanks to the professional collection service, the timely collection of receivables ensures that the balance sheet becomes liquid.
- Thanks to the financing opportunity, it ensures that the working capital needs are met.
- It provides up-to-date intelligence for current and potential buyers.
- It provides the opportunity to work with new companies, the opportunity to work with companies that do not have the opportunity to work on a term basis, and the extension of maturity with companies that work on a term basis, thereby increasing competitiveness.