STEPS General introduction

1. Title
Overview
4-Oct-11
Copyright TradeRiver Finance Ltd. 2009-2010 All rights reserved Intro

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What is STEPS?
 STEPS is an on-line system which provides secure business finance / supply chain
lending to trade Buyers and accelerated, non-recourse working capital to trade Sellers.
 Transactions are negotiated and executed online entirely on STEPS, using the simple
STEPS process, which mitigates or removes the majority of risks associated with
receivables finance.
 We provide significant benefits to buyers and sellers:
 Buyers are provided with a balance sheet neutral trade credit limit, rather like a credit card;
 Buyers can use that credit limit with any Enrolled supplier and can choose any credit;
repayment term of up 120 days credit on a transaction-by transaction basis;
 Sellers benefit from 100% non-recourse cash payment immediately the Buyer accepts the
goods and his payment obligation;
 STEPS transaction costs are low;
 The STEPS process is simple, secure and efficient.
 We also provide an attractive channel for Credit Insurers and Funders to distribute their
products in a controlled, scalable manner.
“One day, all trade transactions will be executed this way”
4-Oct-11 www.traderiversteps.com

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Why STEPS?
 Any company which purchases or supplies goods or services is involved in a “supply
chain”.
 Supply chains can be long or very short (two counterparties - “trade finance”).
 The mechanics of supply chains are frequently complex, inflexible and fragile.
 Each link in the chain requires working capital to maintain, is often a major contributor to
a company’s running cost and is frequently the limiting factor for growth.
 STEPS reduces or removes the working capital tied up in a supply chain altogether.
 And does so quickly, simply and cost-effectively.
“One day, all trade transactions will be executed this way”
4-Oct-11 www.traderiversteps.com

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TradeRiver’s competitive advantage
There are four key aspects:
 Finance availability and procedural integrity are superior to those
currently available.
 Risk mitigation is maximised for liquidity providers, Sellers and Credit
Insurers – their interests are uniquely aligned.
 The process is simple, web-based, scalable and cost-effective.
 STEPS is fully transparent, being updated and managed in real-time.
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5. Using STEPS 5
 Authorised Signatories have secure access by USB security token on any computer
 STEPS has clear user screens and is easy to use, having a standardised process,
unparalleled security and rich record-keeping and reporting capabilities
4-Oct-11 www.traderiversteps.com

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Why is STEPS attractive to Buyers?
 Transactions are funded within the transaction value;
 Once enrolled on STEPS, transactions are executed with no paper documentation;
 Competitive all-in transaction pricing lowers the cost of goods or services;
 Extended credit up to 120 days available for all transactions - the payment term can be
chosen to suit Buyers’ cash flow requirements;
 Provides off balance sheet finance and should not affect existing banking arrangements;
 No other security required;
 No set up or registration costs ;
 The transaction execution process is completely transparent;
 Potential for improved margins;
 Removes need for letters of credit, guarantees, credit confirmations, bank loans etc.;
 Enhances trading relationships by accelerating seller’s cashflow;
 The exchange of goods-related documentation (bills of lading etc.) can continue as normal –
through STEPS if desired;
4-Oct-11 www.traderiversteps.com

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Why is STEPS attractive to Sellers?
 STEPS relies on the Buyer's financial standing, not the Seller’s;
 Immediate, 100% cash settlement without recourse when the Buyer accepts the goods/services;
 Highly cost-effective when compared with current methods of finance;
 Savings can be used to extend credit terms elsewhere in a Seller’s business;
 Releases and accelerates working capital ;
 Any transaction size within the Buyer’s credit limit is permissable - financing large transactions is therefore possible;
 Does not require a Seller credit assessment;
 No setup or registration costs ;
 Improved margins ;
 The transaction execution process is completely transparent;
 Removes exchange rate risk (payment made in transaction currency) ;
 Removes need for letters of credit, credit confirmations, guarantees etc. ;
 Potentially improves trading relationships by enabling Sellers to introduce Buyers to attractive extended payment
terms.
 Additional benefits for a company using STEPS as both Buyer and Seller:
 By using STEPS to finance the supply chain, working capital constraints can be either eliminated or much reduced;
 For example, a Seller can achieve 100% cash in from its Buyer(s) before having to pay its suppliers.
4-Oct-11 www.traderiversteps.com

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STEPS reduces or eliminates supply chain costs
and accelerates payment; a simple example:
Existing (open account) supply chain
Terms of business Working Capital requirement
Supplier(s) The Manufacturer pays the Supplier 28 days after the Supplier’s goods are accepted by 28 days
the Manufacturer.
Manufacturer Manufacturing time is 10 days. 45 + 10 – 28 = 27 days
Retailer The Retailer pays the Manufacturer 45 days after the manufactured goods are
delivered to the Retailer.
 Both Supplier and Manufacturer fund their working capital requirements with bank overdrafts
The Supplier enrols on STEPS as a Seller, the Manufacturer as Buyer
STEPS terms Working Capital requirement
Supplier(s) Paid immediately the Buyer accepts the goods. Nil
Manufacturer The Manufacturer as Buyer elects to take 60 days’ credit from TradeRiver. Nil
He receives payment from the Retailer 55 days after receipt of the Suppliers’
goods, but can wait to pay TradeRiver for 60 days
The Manufacturer is thus paid by the Retailer before he has to settle with
TradeRiver.
Retailer The Retailer pays the Manufacturer 45 days after manufactured goods are
delivered to the Retailer.
 STEPS has removed 55 days’ working capital requirement from this simple supply chain
4-Oct-11 www.traderiversteps.com

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STEPS economics
 The value of a transaction is separated into two constituents: “Transaction Charge” and “Net
Transaction Value”
 Net Transaction Value
– Paid in full without recourse to the Seller when the Buyer accepts the goods
 Transaction Charge
– Fee paid to TradeRiver when the Buyer accepts the goods
- Typically 3 – 7 bps (0.03% - 0.07%) per day
- Inclusive of funding cost, credit insurance, and all operational expenses
- Varies with credit period and Buyer country
In this example Transaction, the economics are:
Transaction Value: USD 100,000.00
Transaction Charge: USD 3,191.11
Net Transaction Value: USD 96,808.98
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Who can enrol on STEPS?
 Buyers
 STEPS relies on the buyer's financial standing, Buyers must have at least two years’ trading history and
financial details. TradeRiver establishes Buyer credit limits prior to enrolment;
 STEPS is global, and Buyers can be established in most major jurisdictions;
 Once enrolled, Buyers can execute transactions with any enrolled Seller who is not an associated party of
the Buyer.
 Sellers
 STEPS is Buyer-centric, and any properly established company can enrol on STEPS as a Seller
 Once enrolled, Sellers can execute transactions with any enrolled Buyer who is not an associated party of
the Seller.
4-Oct-11 www.traderiversteps.com

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The STEPS Process
 Every Transaction follows an identical series of steps
Buyer and Seller enrol with STEPS
Step 1: Seller & Buyer input initial transaction details
Step 2: Seller requests transaction approval
Step 3: TradeRiver Approves the transaction
Step 4: Seller Despatches the goods
Step 5: TradeRiver activates the transaction, allocating funds
Step 6: Goods delivered to Buyer
Step 7: Buyer inspects and accepts the goods
Step 8: Seller issues a Payment Obligation
Step 9: Buyer accepts the Payment Obligation (liability to pay)
Step 10: TradeRiver Confirms Payment Obligation
Step 11: TradeRiver pays Seller without recourse
Step 12: Buyer settles liability with TradeRiver
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STEPS Operational Participants
 TradeRiver UK, London: Centralised administration and marketing office. Manages and monitors all
aspects of TradeRiver operations in close liaison with the Fiduciary Services Provider. TradeRiver UK has
a Service Agreement with, and is a significant investor in TradeRiver Finance Limited.
 TradeRiver Finance Limited: (Guernsey) is a GFSC regulated company that handles all monies transfer
through a tax benign, secure “lock box” account. All funds movement is controlled by the Fiduciary
Services Provider, under the terms of the Fiduciary Services Agreement.
 Fiduciary Services Provider: The Fiduciary Services Provider (Ocra Isle of Man Ltd.) independently
ensures the integrity and consistency of STEPS operations at all key Transaction stages, and monitors
Transaction recovery.
 The Insurer: Chartis (A+) provides global insolvency and protracted default protection for all transactions
within its own credit limit matrix structure, Global Limits ManagerTM.
 Funder(s): Provide transaction funding facilities under individual Fiduciary Services Agreements and
Purchase Mandate Terms and Conditions. TradeRiver is currently finalising funding facilities with
Santander Invoice Finance
 Licensee(s): Lloyds TSB Commercial Finance have expressed strong interest in licensing STEPS on a
white label basis to offer the system to their invoice discounting client base. TradeRiver will derive
turnover-based royalty and annual licensing fees. HOT’s are drafted with LTSBCF.
 Cash Management: A global, multi-currency cash management facility established with HSBC to
accommodate the needs of STEPS participants, and to provide “lock box” security facilities.
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Contact us
TradeRiver Finance Ltd
Granite House, La Grande Rue
St Martin,
Guernsey GY4 6LH.
Tel : 0044 1481 728 360
info@traderiversteps.com
www.traderiversteps.com
TradeRiver UK Ltd.
107 New Bond Street
London W1 1ED
United Kingdom
Tel: 0044 207 788 7690
info@traderiversteps.com
www.traderiversteps.com
4-Oct-11 Version 4.6 Dec 10