It’s no secret that businesses are expanding into global markets at an unprecedented rate. In fact,going global is almost an imperative in order to compete in today’s fast-paced environment. However, for organizations making that leap the process is a complex one and can be daunting, especially for treasury and finance functions that deal with cash management and develop best practices to streamline payments globally.
In fact, according to the 2018 B2B Payments & WCM Strategiesreport, 45% of organizations generate 10,000 or more electronic global payments every month.
Interestingly enough, many of these global payments are made through the use of in-country banking relationships. In other words, a company opens up accounts within the country where they have an office and/or a high volume of payments or collections. Which can seem ironic in a global landscape, but domestic payments tend to have lower processing costs associated with them and are more reliable.With so many options available to organization son how to process payments, it can be difficult to understand all of the nuances and take the steps necessary to proactively manage global cash.
However, if an organization decides to take the route of opening accounts in-country,it is important to be educated and understand the regulations in the account’s country or origin. For instance the UK allows for Direct Corporate Access to Bacs and the Faster Payment Service where most other companies require payment files to be submitted to a local Automated Clearing House (ACH) for processing.
Additionally the recent launch of Single Euro Payment Area (SEPA), a payment-integration simplification initiative of the EU, provides organizations another way to leverage payment factories on a global basis.
As you can see, while taking your organization global may be inevitable it will also take careful consideration to optimize your multi-country and multi-currency payment and collection strategy.
For help navigating the global payments landscape, whether your organization is new to the international market or already established in it, read this best practice guide to “Streamlining Global Payments”for the latest tips for cost-effective payment processes.