Syncada’s recent partnership with Citi global transaction services (GTS) is another significant step for the financial supply chain player from Minneapolis. Set up as a joint venture between US Bank and Visa in 2009, Syncada has already registered $20 billion of throughput on its platform, and makes payments in more than 45 countries using more than 15 currencies.
The new partnership, which marks the fourth bank to join the network, will enable Citi GTS clients to more efficiently manage accounts payable and access a number of financing programmes. Syncada’s business-to-business model is simple enough, according to Kurt Schneiber, Syncada chief executive, but is one of the few financial supply chain players which provide end-to-end solutions. “We provide solutions from the creation of invoices all the way through to final payments and the financing and reporting thereof,” he said.
Its cloud-based open platform also means Syncada does not compete with partner banks for new business; neither does it require installation behind a firewall. Its partner banks – the other three being US Bank, Commerce Bank, and Elavon, a subsidiary of US Bank in Europe -- bring their clients to the network from where they can increase control over their financial supply chains. The banks can also offer their clients standardised invoice processing and payments with integrated invoice financing – all with no significant technology investment.
The network additionally incorporates a trade finance platform where transactions can be conducted on open account thereby avoiding expensive and cumbersome letters of credit. As the network develops, banks which may not have the credit appetite but would rather focus on transaction flows will be able to use the network to locate financier banks with the necessary credit appetite to provide financing.
Growth of the business will be driven by signing additional partner banks which will in turn bring to the network their own corporate buyers and suppliers globally. Currently Syncada has offices in Europe and the US. While its Singapore office is able only to handle the early stage needs of clients in the region, the firm is actively looking to increase the number of sponsor banks to about 20 during the next five to seven years from across the globe, says Schneiber.
Given its burgeoning role in international trade flows, Asia looms large in Syncada’s development plans and it is actively searching for banking partners. “A very large percentage of trade involves at least one Asian counterparty so we need anchor banks in Asia and we are in discussions with several banks across the globe, including in Asia,” said Schneiber.
Specifically, the company aims to have partner banks in Australia, Singapore, Taiwan, China and Hong Kong within five years, with significant implications for regional companies looking for trade financing. “Syncada should make it easier for companies to access trade finance and address liquidity issues more easily in Asia,” said Schneiber. “If you have an invoice for a shipment of goods already approved by a creditworthy buyer in the US, companies can access trade on open account through Syncada rather than going to a much higher cost factoring organisation.” This will also enable firms to decrease day sales outstanding, return saved cash into the working capital cycle and use existing bank lines for more general financial requirements rather than for trade financing, he says.
