Tag Archive for: payments

How can Cash Management improve your Cash Conversion Cycle part III

| 07-10-2016 | Olivier Werlingshoff |

credit-card-851502_960_720This week an article about the underestimation of cash management on LinkedIn caught my attention. 50% of the companies even doesn’t see the added value of a good cash flow forecast! This does not surprise me and therefore gave me a reason to pick up the pen and write another article on how to improve your cash conversion cycle!

In my two previous articles I gave some examples of how cash management could improve the DSO and the DIO but, what about the DPO? The DPO is an efficiency ratio that measures the average number of days a company takes to pay its suppliers. The more days, the better your cash conversion cycle will be.

Extend payment terms

The first action that can be taken is to extend your payment terms. In the payments barometer from Atradius of 2016 you can find an overview of all payment terms and average DSO for all countries in Western Europe. The reasons why payments are delayed are also mentioned.

The average given payment term to B2B customers in The Netherlands is 27 days, the average DSO is 42 days! Most of the time the first action that is taken when companies have liquidity problems is to extend their payments. The negative aspects of this action can be major. The first aspect is the impact this action has on your supplier, because he has to wait to receive his money. He will then have to look for alternative borrow possibilities. Besides the negative relationships, the extra costs will probably be include in his next price. Suppliers can also decide only to send you the goods when paid in advance.

As you can read this action can have a boomerang effect.

Reverse factoring

A possibility to extend your payment term without all negative effects is to use reverse factoring. With reverse factoring you give the possibility to your supplier to receive more favorable financial terms than they would have otherwise received for a loan.

The effect could be that the relationship between you and the supplier can be improved and you still can extend your payments.

Single payment solution

Another solution is to decrease your banking transfer time of a payment. If you have a lot of foreign suppliers, transfer times can easily be extended, especially when you need to use correspondent banks.

Using banks with an international presence as well as a single payment solution will facilitate you to follow your payment and use the fastest transfer method. By doing so, you can delay the moment of payment and still pay on time.

Within the EU you can make direct payments as a SEPA payment, because there are no borders anymore for money transfers. You don’t need local accounts anymore to facilitate and accelerate your payments.

 

Olivier Werlingshoff - editor treasuryXL

 

 

Olivier Werlingshoff

Owner of WERFIAD

 

Five points to consider when choosing your payment system

| 05-10-2016 | TIS | Sponsored content |

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Transparency, reduced risks – and a one million euro saving per year

The payment processes in corporations and internationally active companies are more complex than you might think at first glance – and they are unclear and non-transparent virtually everywhere. This complexity results from the branched company structure and the consequent variety of banking arrangements maintained at central HQ and out in the branch offices and subsidiaries. Various currencies, formats and security keys present an obstacle to unitary, standardized payment processes and an overall view of bank transactions.

Intelligent payment systems in the cloud can remedy this situation: they improve transparency over payment processes, reduce costs and risks and form the basis for better company decision-making. In the typical scenario of an internationally active company they easily contribute annual savings of one million euros.

Download the executive briefing.

 

Netting, simplifying your intercompany cash management

| 16-09-2016 | Jan Meulendijks |

nettingcashNetting is mainly used by global operating companies with a large number of subsidiaries; the reach of netting can however also include smaller company structures and save a lot of handling and costs.

A company with a number of (foreign) subsidiaries will inevitably face a lot of internal deliveries, invoices, payables, receivables between all these subs (in multiple currencies).

Of course each individual transaction can be handled on it’s own, but this results in a very large number of ledger entries, payments, transaction costs, currency handing.

A netting system in which all intercompany movements are registered (manually or, preferably, automated by your ERP system) sees to it that on the desired netting date (e.g. daily, weekly, monthly….) each sub is informed about the nett amount to pay or receive to/from the central netting account.

netting

Source: Netting – An overview

Today’s generation of ERP/ledger/treasury software will often provide a netting module. I notice however, that in daily practice only the larger multinationals use this solution. The availability of netting solutions has reached the level that also smaller company structures may profit from the netting technique and that it is worth investigating the efforts and consequences it brings to your company.

Jan MeulendijksJan Meulendijks – Cash management, transaction banking and trade professional

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Instant Payments: major innovation ahead! How fast is “the new normal”?

| 07-09-2016 | Boudewijn Schenkels |

Imagine it will be possible to transfer money within several seconds from any bank account to another bank account. 24 hours a day, 7 days a week. It will open large business opportunities enabling many innovative payments use cases.

After the introduction of SEPA the market is ready for further innovation. New payment laws (PSD2) make the payment market more competitive and new payment providing parties are anxious to participate. The continuous development of the ‘always on’ economy drives the need for faster and 24/7 payment execution.

According to the European Retail Payment Board (ERPB), an instant or immediate payment is an electronic (retail) payment solution, available 24/7/365 and resulting in immediate interbank clearing of the transaction and crediting of the payee’s account with confirmation to the payer within seconds of payment initiation, irrespective of the underlying payment instrument used and arrangements for clearing. Basically: sending and receiving payments 24/7 within seconds. National instant payment solutions have already been successfully launched in a number of European countries, such as Denmark, Poland, Sweden and the UK.

The SEPA Instant Payment, based on the SEPA Credit Transfer, can be offered in SEPA by November 2017; with the Rulebooks for this so called SCT Inst scheme becoming available in November this year. Some communities will offer Instant Payments from the start, others will follow later, but not offering Instant Payments doesn’t seem to be an option. Various other countries, including The Netherlands, Belgium, Spain and Italy, are running programmes to deliver Instant Payments to their communities in the coming years. The major Dutch banks have committed themselves to deliver Instant Payments, or what they call: “the new normal”, by May 2019.

Instant Payments in itself will offer new interesting payments use cases, but it will certainly serve as a platform to support many new innovative payments services.

Impact for Treasurers and Cash managers

For treasurers and cash managers there will be large changes as well as opportunities. For a long time banks have provided cash pooling solutions to their customers, but Instant Payments will allow to sweep accounts at any time to enable efficient cash pooling and distribution eventually throughout Europe.

Another few examples of these “future” use cases are:

  • Pay upon delivery (car purchase, market place transactions) every hour of the day
  • Enabling of cash transactions replacement
  • Instant Pay-out of Insurance payments: in case of a calamity an immediate pay-out and availability of funds can be very beneficial for consumers;
  • Instant lending: propositions where loans can be granted in near real time the pay-out can be done instantly providing the customer with access to the funds immediately
  • Notary payments: immediate transfer of funds also in the weekend
  • Request for Instant Payment: request a payment and get payed immediately when authorised
  • Time critical or “just in time” business payments: the greater transparency in a SEPA Instant Payment (within seconds it is either successful or not) will enable businesses to pay and be paid on delivery (e.g. shipping, delivery of goods, etc.), or to settle fees such as tax, port fees etc. associated with a cargo to enable its release
  • It can replace some urgent payments services
  • Late cut-off times for SEPA batch payments by re-using Instant Payments: if a service is introduced that converts batch SEPA Credit Transfer payments into Instant Payments businesses can profit from the 24/7 instant character of Instant Payments without major changes to their payments environment; depending on the size of the batch and the capacity of the instant payment infrastructure batch payments can be executed in minutes or in a few hours and out of business hours; it allows business to pay later, pay on a specific day of the month and increase liquidity
  • Instant Direct Debit: an Instant Direct Debit would combine the advantage for businesses of having instant clarity of the payment succeeding and receiving funds, for instance last minute lottery ticket

You will say, “too good to be true”, but they are all in scope for “the new normal”. I would like to say: be aware of all the changes and business opportunities for your organization and prepare yourself!

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Boudewijn Schenkels

Senior Consultant Payments @ Payments Advisory Group

 

 

TIPCO & TIS Webinar – Streamlining Your Treasury Processes: Trends in Payments and Reporting

| 16-06-2016 | treasuryXL |

tipcotisDear community members, we would like to bring something to your attention: TIPCO and TIS joined forces to organise a noteworthy webinar on the 7th of July: TIPCO & TIS: Streamlining Your Treasury Processes: Trends in Payments and Reporting.

The treasuryXL team works hard to bring you the most relevant treasury events and courses. Are you organising an event or did you run into an event that’s not on our website yet? Please let us know by using the contact form or simply e-mailing [email protected].

Since we have been in close contact to both TIS and TIPCO for some time now, we know this webinar will be something interesting; they have their own solution that can be complementary for the already existing market. TIS and TIPCO have assured us the webinar focuses on bringing you new insights on your treasury processes. So, we would like to emphasize that it will not be a sales pitch.

Content of the webinar:

You’re involved with treasury topics in your organisation daily. You know how important it is to have a handle on your data. However, do you have the right tools and processes in place in order to keep your activities streamlined while also being able to report on the key information? Are you reaching maximum efficiency and accuracy within your department – or is there a better way forward?

You will learn how to:

  • automate and standardise your payment transactions
  • enhance transparency and control through liquidity and cash flows
  • manage banking relationships and complex banking landscapes more efficiently
  • improve your treasury reporting at the touch of a button
  • reduce complexity and easily link subsidiaries

Speakers:

hubertrappoldHubert Rappold, CEO and Co-founder, TIPCO

 



 

joerg wiemerJörg Wiemer, CSO and Co-founder, TIS



Practical info:

Date: Thursday, 07th July 2016
Time: 15:00 – 15:45 CET
Duration: 45 minutes
Language: English

Follow up

Missed the TIPCO & TIS Webinar? Don’t worry we got you the webinar recording.

Find more treasury related events on our event calendar, we also promote treasury related education on our education&training page. 

Stephanie Derkse

Stephanie Derkse

Community Manager