Late last year, Barmag – the man-made fibre business of surface engineering, polymer processing and additive manufacturing specialist Oerlikon Group – implemented a digital trade finance platform from Surecomp.
Barmag provides technologies for the production of man-made fibres and precision metering pumps, serving industries including textiles, automotive, chemicals and painting. With operations spanning Europe, Asia, China, Turkey and the US, it employs 2500 people worldwide and generates approximately €800m in annual revenue.
Barmag’s treasury and structured finance team in Germany has seven members located in Remscheid (Barmag headquarters) and Neumünster.
“The new platform will be made available not only for Germany but also for our entire group to manage the whole product line of export letters of credit, standby letters of credit, export collections and all types of guarantees – including parent company guarantees – as well as credit line management,” explains the company’s Head of Treasury, Martin Tomala.
He describes mitigating risks and securing payments by successful handling of the respective commercial trade finance instruments as a key element for Barmag.
“There are several reasons why we have made the decision to move to digital trade finance now,” says Tomala. “Firstly, it is about speed. The traditional way of managing trade finance is time consuming as involves huge documentation processes, manual approvals and as such causes delays.”
The second consideration is transparency when it comes to tracking transaction status and payments and also the need to minimise fraud and errors.
“The third factor is communication with our banks,” adds Tomala. “We want to step back from communication by email or via multiple bank portals. In addition, banks tend to refrain from hosting their own portals.”
Finally, the company believes it has found a trade finance platform which fits at a time of increasing demand for speed, transparency, cost-effectiveness and even progress in the full digitisation of its international commercial trade business.
Barmag previously relied on Excel and email to process a high volume of trade finance transactions across its global network of subsidiaries, most notably using export letters of credit, guarantees and group guarantees.
Tomala observes the limitations of relying on Excel and email for trade finance transaction processing included missing information, lack of data/multiple sources of data leading to irregularities, limited transparency and lack of standardisation across entities.
Another factor in Barmag’s decision was Surecomp’s commitment to AI. Barmag plans to leverage AI-driven automation for tasks such as guarantee text validation, application processing and letter of credit document checking.
“We are continuously driving digitisation and efficiency across all aspects of our business”, says Tomala. “We are now empowering our treasury team to work seamlessly with our banks, to accelerate response times and help drive better trade relations with our global customers and partners.”
By shifting away from manual bank communication and document exchange, Barmag will gain access to real-time, API and AI-powered digital connectivity. “AI-driven automation will benefit our treasury function now and in the future by enabling faster and secure processes and speeding up reporting time,” adds Tomala.
