2. Bills and Collections - An Overview

2.1 Introduction

A bill, as an instrument of international trade, is the most commonly used method for a seller to be paid through banking channels. Besides credit risk considerations, bills are the customary business practice for trade and a particularly important fee-earning service for any bank.

The Bills and Collections (BC) module supports the processing of all types of bills, both domestic and international. It handles the necessary activities during the entire lifecycle of a bill once it is booked.

In an effort to empower your bank in handling a high volume of credit and to enable you to provide superior services to the customers of your bank, Oracle FLEXCUBE provides you with the following features:

These will be processed as part of the batch processes run at BOD or EOD. The system automatically calculates the date on which the events should take place, based on the frequency and the date specified for the bill.

This chapter contains the following sections:

2.2 Operations on a Bill

The operations that you can perform on a bill depend on the trade finance product type you are processing. Further, the messages and advices that are generated for the bill are determined by the operation you perform on the bill. The interest, charges or fees can be different for each operation that you perform on the bill.

In Oracle FLEXCUBE, all types of bills are classified in to two categories. They are:

All types of incoming bills (international and domestic) financed by your bank are termed Import bills. Similarly, all outgoing bills (international and domestic) financed by your bank are termed Export bills.

The operations that you can perform on a bill have been diagrammatically represented below:

The system allows you to effect a change of operation for the following operation types:

For instance, while processing an acceptance bill, which needs to be discounted, you need not enter a new bill to discount the bill. You need to just amend the operation type from acceptance to discount.

SWIFT Messages for an Import Bill

The messages that are generated for an Import bill depend on the operation you perform on the bill. The following are the SWIFT messages that are supported for an Import bill.

Description SWIFT code
Acknowledgement MT410
Acceptance Advice MT412
Payment tracer MT420
Acceptance tracer MT420
Advice of Payment for a Collection bill MT400
Advice of fate (principal and acceptance) MT422
Refusal Advice (payment and accept) MT734
Discharge Advice MT732
Tracers that are generated MT420
Authorization to pay, accept or negotiate MT752
Advice of Payment for import bills under LC MT756

SWIFT Messages for an Export Bill

The messages that are generated for an Export bill depend on the operation you perform on the bill. The following are the SWIFT messages that are supported for an Export bill.

Description SWIFT Code
Acknowledgement MT410
Acceptance Advice MT412
Payment tracer MT420
Acceptance tracer MT420
Refusal Advice (payment and accept) MT734
Discharge Advice MT 732
Amendment of instruction MT 430
Reimbursement claim MT 742
Discrepancy Requirement MT 750
Tracers that are generated MT 420

2.3 Interest and Charge Liquidation

The BC module has a flexible mechanism for raising, tracking and controlling the interest that you collect and the charges that you levy. These may be on a cash or account receivable basis. They can be collected either in advance or in arrears and can be accrued or non- accrued.

Interest can be collected either as a rate or as a flat amount. Standard Interest rates can be defined for each bill type.

Changes that you effect to fields like the base date, exchange rate or account numbers require reversal entries The system generates reversal entries for the corrected amount, account, rate etc.