What is Corporate Trading?
A corporate trade is a transaction in which a trading firm makes targeted investments in the business activities of its customer. These investments enable the customer to improve business performance and achieve strategic objectives. A corporate trade can involve cash, but most commonly it uses a non-cash currency called a “trade credit” to facilitate the transaction.
Step One: Define the transaction
In the first step, the corporate trading firm and customer define a problem that the customer needs to solve, or an opportunity that the customer wants to seize.
- Solving problems: In many corporate trades, the trading firm invests in an unwanted asset or obligation, paying a price that is well above marketplace expectations so that the customer can minimize or eliminate losses.
- Seizing opportunities: Rather than investing in an underperforming asset, the trading firm can also invest in something that is desirable. For example, a corporate trade can enable the customer to enhance a marketing program or fund a project.
Step Two: Exchanging services
In the second step, the customer uses the corporate trading firm to provide business services in exchange for the investment that has been made to solve the problem or seize the opportunity.
- The most common service is to provide media activation or other media-related activities. Sherwood is an ideal partner for this type of transaction because of its world-class integrated media capabilities. NOTE: These services are provided without any interruption or loss to an existing media agency relationship.
- Other services include transportation; freight & logistics; and production, whether it is traditional printing and merchandising, or digital development such as website, animation, illustration, 3D, etc. The Sherwood Commerce team is ideal for overseeing this type of transaction.
Regarding the “trade credit:” When a trade credit is used to finance a transaction, it has the equal value as cash. The credit is created in Step One of the transaction, and redeemed in Step Two.
The result: improved business performance
A successful corporate trade results in increased revenues and decreased costs for the customer, not to mention the reward that comes with solving a problem or seizing an opportunity!
Sherwood’s goal for every transaction is for the customer to receive “Total Fulfillment” which we measure three ways:
- Transactional Fulfillment, which means that all trade credits are redeemed, and which is also measured by performance indicators related to delivering the media, disposing the asset, etc.
- Strategic Fulfillment, which is measured by the achievement of any defined project objective(s) related to earnings, successful liquidation, etc.
- Relationship Fulfillment, which is defined by customer satisfaction and repeat business.