Advances :  Business Sector (‘BP’)

Introduction:

'Advances' are the source of financing provided by the banks to the companies, to meet their short-term requirements. Advances are a credit facility by nature. Advances on sight documents and the discounting of usance documents are special features of the application. The advanced or discounted documents
are handled as subcontracts of the respective export/import documents (BE) and (BR), export collections (BO), import collections (BC), or documents under a transfer (BT)

An advance can also be opened directly (i.e. without having a parent contract).

Types of Advances: 

Bankers Accept.
Discount.
ECR Financing.
Forfaiting.
Invoice Advance.
Other.
Purchase.

Flow Chart - 

Pre open Advance -

An advance can also be opened directly (without having a parent contract) using BPTPOP transaction.
No interest will be calculated in this transaction. This transaction is used to pre-open an Advance on a standalone basis.

An advance can also be opened directly from Export L/C document set

Export bills under a Usance Letter of Credit can be discounted after it has been accepted by LC Issuing bank. Thereby, an advance credit facility is extended to the beneficiary by providing finance to them after discounting the bill amount. This process must be handled outside of Export LC module by launching or selecting Advance module (BPTOPN) from the Export LC contract. Therefore, to initiate discounting within Export LC module, a checkbox “Create Advance "is available in Send, Accept and Settle Documents transaction (BETPAY).

Advancing a Document Set -

An advance can be granted directly and without a global contract to any party If the transaction is launched in connection with a set of documents under an Export L/C, the advance is made to the presenter of the documents. Under an Export Collection, an advance is paid to the issuer,
under an Import L/C, the advance is paid to the presenter, under an Import Collection, the advance is paid to the remitting bank or the presenter under a Transfer L/C, the advance can be granted to the presenter on the primary and/or secondary beneficiary side.

Advances under an Import or Export Collection can be processed using the transactions Sending documents (BOTDAV) or Advising documents (BCTDAV) as soon as the contract has been created.

To process an advance for sight documents under 'Transferred L/C', the transactions Receiving Documents from 2nd beneficiary (LTTDCK) on the secondary beneficiary side and Receiving Documents from the 1st beneficiary (BTTDCK) on the first beneficiary side must first be processed for the advance.

For usance documents, the transaction Send, Accept and Settle Documents (BTTPAY) must have been processed under 'Transferred L/C'.

To create an advance for a document set , BPTOPN transaction is used.

Select it from the menu item[Financing Products -> Advance -> Main -> Open].

Amending Advance contract -

'Amending' is to make any kind of changes to the Advance contract. These changes may include increase in the advance amount or validity changes or transfer of
risk or other changes to the terms and conditions.

To make changes to an Advance contract, BPTAME transaction is used.

Settling an Advance -

The invoiced party is debited with the amount of the invoice and the loan account of the advanced party credited. If the customer was advanced a smaller amount than settled in the invoice,
the customer shall be credited with the difference.

To settle an advanced invoice, BPTSET transaction is used.

Repayment / Recourse under Advances -

The advances are made ‘with recourse’, so that if reimbursement is not received when due from the issuing bank, repayment of the advance can be demanded from the beneficiary. If the credit was confirmed and the terms and conditions are fully complied with, the advance or agreement to advance
is made on a ‘non-recourse’ basis.
To reclaim the advanced amount from the Beneficiary, BPTCRF transaction is used. This transaction is Not allowed if the advance contract is without recourse.

Closing Advance -

The Created Advance can be closed at any time for several reasons. To Close an existing Advance contract, BPTCAN transaction is used.

Re-Opening Advance -

There is a Possibility to reactivate a previously closed Advance contract in the System in order to process other transactions. Transaction BPTROP is used to re-activate a previously Advance contract.

Transactions related to Advances - 

Outgoing Messages -