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Blog / 24 September 2012 / Richard Ransom, Product Marketing Manager, Payments, Bottomline Technologies
Global Cash Control
Richard Ransom, Product Marketing Manager Payments, Bottomline Technologies
Bank failure, country bailouts and ongoing concerns regarding the Euro continue to challenge business. For any organisation, the need for improved, preferably real-time visibility and control over cash is now becoming critical. Yet with most companies running multiple bank relationships over multiple geographies, with each bank demanding different payment file types and payment cut off times, imposing control over this process is tough. Information cannot be easily retrieved; and money cannot be rapidly relocated across borders. Many organisations are now employing dedicated individuals to do nothing more than pull together statement information from each bank in a bid to create an accurate snapshot cash position on, perhaps, no more than a daily basis.
Organisations need better visibility; they need more control over payment processes; and they need to be able to shift money between banks and geographies with more confidence and in a far more timely fashion.
Centralised Payments
As a result, there is a growing interest in the concept of the Payments Factory – a shared service centre where payment activities, typically Treasury and Accounts Payable, are centralised.
The essence of a Payments Factory is simple: it is the creation of a single hub that can manage all payment and collection types – from Treasury and payroll to expenses, direct debits, cheques and supplier invoice payments; handle all balance and transaction reporting; provide all corporate to bank exchanges, such as deal confirmations; and manage two way communications with all banks.
Whilst this is not a new concept, one of the key changes driving the growth in Payments Factories is the increased standardisation in payment methods – from SEPA to SWIFT for Corporates for multi-bank connectivity. With a single, consistent way of managing the provision of information to banks, SWIFT enables organisations to consolidate banking relationships without incurring additional IT overhead, reducing costs and attaining better levels of service from the remaining banks.
Visible Cash
The key requirement of a successful Payments Factory is the ability to consolidate multiple payment flows across an organisation to impose more control over the payment process and deliver the real-time cash visibility now critical in a volatile global economy. This means ensuring every payment type can be handled within the Payments Factory – from domestic to SEPA and electronic to cheques.
One of the primary benefits of this approach is a chance to reduce cost whilst improving visibility of cash flow. Organisations can rationalise e-banking platforms, simplify and minimise the number of systems that need to be supported and maintained, while increasing straight-through processing (STP).
Rather than relying on complex manipulation of multiple Excel spreadsheets to attain a view on the current cash position, by automating the reporting of cash balances directly from each subsidiary’s bank account, the centralised Treasury team has continuous access to an accurate and up-to-date cash position enabling better control over timing for supplier payments, early payment discounts and investment opportunities.
Operational Benefits
Creating a shared service centre in this way enables an organisation to meet the key objectives identified by EuroFinance in research commissioned by Logica: namely greater visibility and control over cash (79% of interviewees). However, a Payments Factory can provide a number of additional benefits to organisations – from improved security and compliance through the use of secure channels such as SWIFT to minimising operational risk by introducing automation and reducing manual interaction in the payments lifecycle.
In addition, a Payments Factory provides an excellent platform for consolidating bank partners and driving far better relationships with the remaining banks. By providing a single payment solution that can handle any bank file format or requirement, it can minimise the impact of shifting banks and overcomes the lock-in effect of proprietary e-banking platforms that has constrained organisations in recent years. The result is better service from the banks, lower cost per transaction and a greater flexibility in payment flows globally.
Given the level of global uncertainty and the need to impose greater control and visibility over cash management, many organisations are now considering a Payments Factory. And with growing global standardisation of payment instruments and processes, the model is becoming far easier to achieve.
September 2012 / 10 September 2012 / Frances Maguire, Columnist, FX-MM
As delegates prepare to head to Monaco at the end of September for EuroFinance’s flagship International Cash Management and Treasury conference, Frances Maguire looks at what’s in store at this year’s event.
Themed around what it takes to achieve the agile treasury that can withstand volatility and create stability, this year’s EuroFinance conference looks set to tackle the key issues of the day.
Katharine Morton, Director of Programming at EuroFinance, says that treasury agility, and attaining a robust treasury that is agile enough to cope with the current uncertainty and volatility in the global economy, will be the master theme around which the conference is built. She says: “In the plenary sessions we will be looking at what information treasurers need to make the right decisions to make their way through the uncertainty and how to beat the odds. It’s an exciting time to be a treasurer with both challenges to surmount and opportunities to identify – the conference will showcase the companies who are expert at both sides of this risk/reward equation.” (more…)
Banking news, News / 2 July 2012 / Logica
Business and technology service provider Logica has signed an agreement with Rabobank to help the Bank’s corporate customers meet the introduction of Single Euro Payments Area (SEPA). (more…)
Banking news, News / 16 May 2012 / Logica
Logica, a leading business consulting and technology services company, is client-ready for the Singapore financial industry to meet the upcoming G3 immediate payments initiative. Logica’s All Payments Solution (LAPS) already has a proven track record to process high volume, low-value payments in real-time – set to be a key pre-requisite for immediate payments. While much is still to be determined on the G3 initiative, it is clear banks will need to invest in product development and LAPS is well positioned to enable banks to maximise their ability to launch new products and services while minimising settlement risk. (more…)
Banking news, Currency news, News / 14 May 2012 / Logica / FS Club
A new survey of the banking industry unsurprisingly shows with the Sovereign debt issues still raging across Europe, nearly 70% of respondents believe that the Euro will not survive in its current form, however overall sentiment with regards to the Euro and Single Euro Payments Area (SEPA) was still more positive. Interestingly the views around the impact of the Payment Services Directive (PSD) are less clear, with the majority not seeing much impact yet. (more…)
May 2012 / 8 May 2012 / Frances Maguire, Columnist, FX-MM
The benefits of eliminating paper from the invoicing process are fairly obvious. With SEPA offering an ideal launch pad for a successful European e-invoicing initiative, with the savings estimated at around EUR 64.5 billion per year for businesses, Frances Maguire looks what is holding up wide scale adoption.
The cost savings and efficiency gains of e-invoicing have been well documented and yet wide scale adoption, although growing year-on-year, has been slow. With a SEPA migration date set, it remains to be seen whether this will be the final push that is needed. Certainly, Garry Young, Director of Corporate Services for Logica’s Global Products Business, is in little doubt that when corporates are preparing for SEPA, they really should take the opportunity to rethink invoicing processes, but believes it is lack of readiness for SEPA itself that is stalling progress.
According to Young, research shows that many corporates are still not prepared for SEPA and how it will affect their business. But by using SEPA as a catalyst for a broader initiative of payments transformation, including processing of outgoing and incoming invoices, he believes there is great potential for improved cash visibility, reduced risk and cost savings. “For example, the invoice reconciliation process can be greatly improved simply because SEPA uses XML ISO2022 as a format. (more…)
April 2012 / 5 April 2012 / Frances Maguire, Columnist, FX-MM
For banks which are active in the global transaction banking arena Basel III and SEPA are likely to bring both threats and opportunities. Frances Maguire talks to industry experts about these and assesses their potential impact.
Transaction banking sits at the core of every large bank – it is the heartbeat. The combination of trade finance, payments and cash management services means that it is an essential service, that survived the downturn and economic turmoil, but this is not to say that it is not being caught up in the transition and regulatory reform that lies ahead. However, while the large transaction banks are gearing up for change now, the full impact of the changes needed by corporate treasuries is yet to be seen.
Ruth Wandhofer, GTS Head of Regulatory & Market Strategy at Citi Global Transaction Services says that both banks and their clients are now entering an accelerated preparation phase for SEPA given the February 2014 deadline. With the regulation now expected to be published in April, SEPA migration has been given a clear start date. (more…)
February 2012 / 3 February 2012 / Frances Maguire, Columnist, FX-MM
The credit crisis and the resultant spotlight on liquidity management have meant that Treasury Shared Service Centres (SSCs) are back in fashion. But, as Frances Maguire finds, this time round, technical advancements and cloud computing have meant they are an even more viable and attractive solution.
Since 2009, corporate treasurers have been trying harder to bring together payments and receivables in a bid to centralise treasury and manage liquidity at a higher level but now the technology is available to enable them to have greater day-to-day control and visibility across all aspects of a centrally managed cash flow, through a shared service centre.
Independent research commissioned by Logica saw 79% of 150 treasurers interviewed giving visibility and control over cash as the most important benefit in their payments factory roadmap.
Tim Brew, Head of Marketing, Global Financial Services at Logica, says a shared service centre can bring greater visibility, control and insight from treasury operations. He says: “With multiple siloed systems, it can be difficult to build an accurate picture of payments patterns and find opportunities to optimise cash in the business without resorting to complex offline processes and spreadsheets. With an SSC, businesses can gain a bird’s eye view of all payment flows, processes, timelines, suppliers and costs – and use this to both more accurately forecast cash flow and find new efficiencies.” (more…)
December 2011 / January 2012 / 5 January 2012 / Frances Maguire, Columnist, FX-MM
While 2011 will go down as the year that FX forwards and swaps were exempted from the Dodd- Frank Act, it has been a long year of waiting for the regulators to detail the new era of clearing and collateralisation, finds Frances Maguire.
In April 2011, the US Department of the Treasury issued a long-awaited determination to exempt foreign exchange swaps and forwards from the mandatory central clearing requirements of the US Dodd-Frank Act, ending months of uncertainty since the law was passed in July 2010. FX options, currency swaps, cross-currency swaps and non-deliverable forwards will not be exempt. Nor are other OTC swaps that corporates use, such as interest rate and credit default swaps. Furthermore, although FX swaps and forwards will be exempt from mandatory central clearing, the US Treasury stressed they will still be subject to rigorous new reporting requirements and strengthened business conduct standards, notably, the creation of a global foreign exchange trade repository, which will dramatically expand reporting to regulators and to the market more broadly. (more…)
Banking news, News / 8 September 2011 / Logica
The Financial Services Club and Logica today revealed the results of its research into the state of play in European Payments and the progress of the implementation of the Payment Services Directive (PSD) and Single Euro Payments Area (SEPA). The report surveyed over 360 global bankers, consultants and technologists and covered five key areas. These included the development of the European Union, the impact of the PSD and SEPA, bank-to-corporate relationships, and liquidity risk. (more…)
October 2010, Past issues / 20 October 2010 / FX-MM
Sibos participants will be asked to take a long, hard look at the future of payments and where revenue will come from.
The loss of cross-border revenues in Europe coupled with the investment needed to become SEPA compliant has both made payments a scale-game as well as prompting banks to look at how they can add value to payment services by offering faster and more efficient premium services by developing einvoicing and mobile payments capabilities. These issues will be discussed across three sessions at Sibos this year.
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August 2010 / 16 August 2010 / FX-MM
While it is hoped the mobile channel will provide a launch pad for SEPA payment instruments, there still more work to be done and the use of mobiles by corporate treasurers may be more limited. Frances Maguire reports.
The European Payments Council (EPC) has published a first white paper on Mobile Payments for SEPA, defining the basic requirements, rules and standards necessary to execute payments across 32 SEPA countries, using a mobile phone. The paper explores how mobile payment services can be delivered through cooperation between service providers active in the banking industry and the new players emerging in the mobile ecosystem.
(more…)
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