Key points
- “Overlay capability” is a platform modelling term that separates the trade model itself from the financial, credit and tax arrangements layered on top of it.
- Common overlay capabilities: hedging, export credit insurance, open-account sales, pledges and export tax refunds.
- Overlay capabilities can be combined, each carrying its effects into the relevant accounting and risk processes.
In practice
Treat “hedging business”, “credit insurance business” and “open-account business” as separate business types, and a company soon faces a combinatorial explosion: own-account export with credit insurance, own-account export with credit insurance and open account, and so on – each needing its own process and reports. Worse, each transaction can carry only one label, so the other attributes are lost.
Once these capabilities are abstracted as attributes that can be layered on, the trade model stays stable and overlays are attached as needed: contracts with a hedging relationship enter exposure and hedge accounting; insured shipments come under limit and claim-deadline monitoring; open-account contracts use credit and enter ageing management; and qualifying exports enter the refund process automatically.
How Tranexio supports it
Tranexio layers overlay capabilities – hedging, credit insurance, open-account sales and tax refunds – onto the trade business model. Refund handling is enabled automatically for exports under general trade or processing trade; pledges are supported in the current release with registration and limit conversion. See Trade models.