Photo of Nigel Venrooij, Saudi Basic industries Company and Steven Elms, Citi.

How digitisation of SABIC’s LC processes is saving money, time and resources for itself and its customers

The challenge

SABIC has 60 people involved in processing the documentation for more than 8,000 letters of credit (LCs) issued yearly. All of its processes were manual. It took up to four days to complete the documentation because of the back-and-forth coordination with banks dealing with the various discrepancies raised as a result of manual processing. The four-day delay was causing a major problem. In neighbouring countries, such as Pakistan and Egypt, shipments were reaching the port of destination earlier than the documents. This caused a further problem, because without the documents, the shipment cannot be received and the port started to charge demurrage.

On the path to create a digitised export LCs process, SABIC set a number of key objectives to enhance its clients’ experience and improve operational efficiencies. These included:

• Reducing the number of touch points between SABIC, its clients and banking partners, to smooth the process through a seamless solution.

• Reducing the turn-around time for clients to obtain their receiving documentation to one day, instead of four.

• Eliminating manual process through digitisation.

• Reducing operational errors and enhancing reconciliation to improve customer service.

The solution

Citi implemented its CitiDirect BE for trade solution. This is an online banking platform enabling SABIC to send all documentation online. The entire process now takes a few hours, reducing the overall timeline considerably from four days to just one day.

All of SABICS’s documentation processes are now fully automated through this cutting-edge technology. This resulted in the company fully embracing true digitisation and being the first petrochemical company in the Middle East and Africa to implement and leverage an end-to-end automated trade solution.

Best practice and innovation

SABIC collaborated with Citi’s Treasury and Trade Solutions for an innovative, automated receivables solution to provide maximum efficiency. By incorporating the digitised solution, SABIC eliminated major processing bottlenecks and inefficiencies and helped the business lower its documentation processing costs.

Replacing redundant processes with technology helped SABIC optimise its cash flow, and avoid overwhelming manual reconciliation processes. There were 60 people involved in processing the documents, now far fewer people are required for documentation processing enabling staff members to spend more time on other tasks.

The reduced documentation process, from four days to one day, also means the documentation can now reach its destination on time, therefore no demurrage fees are levied. This is a huge cost saving. SABIC, in partnership with Citi, is now exploring the use of blockchain and other innovative technologies to help achieve its overarching vision of digitisation.

Key benefits

• Scalable solution.

• Saves time: reduced LC processing from four days to one.

• No more demurrage penalties by the ports for late documentation submission.

• Relieves human resources pressure; deployment possible on other tasks.

• Considerable cost savings through efficiency and streamlining of once manual process.

• Enhanced customer service and loyalty through efficiency and lower expenses.