CIMB completes maiden BPO transaction

It joins ranks of banking groups worldwide.

CIMB Bank announced that it has completed Malaysia‟s first live Bank Payment Obligation (BPO) transaction with receivables financing.

According to a release from CIMB Bank, this also marks the first cross-border collaboration involving inter-bank BPO between CIMB Bank and China CITIC Bank.

The release said that with the completion of this maiden BPO transaction, CIMB Bank has become the 11th banking group worldwide to have done a BPO transaction.

The release noted that, introduced by the Society for Worldwide Interbank Financial Telecommunication (SWIFT) and the International Chamber of Commerce (ICC) back in 2013, BPO is an undertaking of a buyer's bank to pay a seller's bank upon successful data matching on the SWIFT's unified electronic platform.

Further, it is a trade transformer that combines the best of both Letter of Credit and Open Account Trade in terms of risk mitigation and flexibility in facilitating international trade.

Here's more from CIMB Bank:

In addition to leading the first BPO in Malaysia, CIMB Bank is also proud to offer post-shipment financing for BPO transaction in helping customers to unlock trapped cash and generate liquidity to fuel business growth.

“CIMB Bank is pleased to be the first bank in Malaysia to facilitate a live BPO financing transaction aside from joining the ranks of the 57 BPO ready banking groups worldwide.

This successful transaction was made possible through our alliance with China CITIC Bank. Against the backdrop of robust intra-Asian trade growth and as top tier banks in our respective regions, both CIMB Bank and China CITIC Bank represent the natural fit to collaborate in this new trade settlement method.

This BPO collaboration lays a strong foundation for both Banks to collaborate further in the China-ASEAN trade flows moving forward,” said Dato' Lee Kok Kwan, Chief Executive Officer of Corporate Banking, Treasury & Markets, CIMB Group.

BPO, as an alternative payment method, offers access to liquidity and provides risk mitigation of a Letter of Credit while advocating operational efficiencies and flexibility of an Open Account Trade.
It reduces tedious and manual document handling, boosts overall operational efficiency and accelerates payment cycle between buyer and seller.

Through BPO, a seller can shorten its days sales outstanding (DSO) by approximately 10 days through eliminating tedious document checking and the risk of discrepancy dispute, thus reducing overall cost.