Should you consider centralising payment processes?

There are numerous benefits of centralising payments; lower FX risk, improved cross currency cash management, enhanced efficiency and significant cost-savings.

Many businesses use several bank accounts in order to conduct transactions in local currencies when sending and receiving international payments, resulting in high FX rates, multiple transaction charges and an increased man hours required for managing and monitoring multiple bank accounts. This makes cash flow management more difficult and is detrimental to liquidity.

The introduction of the Single European Payments Area (SEPA), together with advances in technology, have begun to make centralised payments possible, allowing even relatively small organisations to streamline their payment processes. These companies are able to reduce transfer costs and improve payments – both internally and for their customers and suppliers.

Before organisations consider centralising payments they should carefully consider which option is right for their operation and how this would integrate with existing processes and business requirements. For example, will the central system meet tax and compliance requirements automatically, or will additional processes be required, potentially devaluing the benefits of a centralised system.

Also, some systems may make the process of international payments and FX more complicated, costly and time-consuming.

It must also be taken into account that centralising the payments process will have implications on how cash flow is managed on a day-to-day basis, not to mention the investment required to migrate an entire supply chain to a new system.

Banking Circle provides its members with a way of managing their cross border payments via a segregated IBAN account from which they can immediately begin making and receiving payments. Members (typically acquiring banks or PSPs) are able to open an unlimited number of accounts to serve each of their suppliers or merchants, meaning that they have full control and visibility.

By joining, businesses can improve treasury performance and alleviate cash flow concerns. Unlike traditional payment processing that can take days, cross border payments between member accounts within Banking Circle occur in real-time.

Transactions can be completed through IBAN accounts in any of the major currencies, between almost any countries in the world, allowing organisations to significantly reduce the number of accounts required to process payments in local currencies. Banking Circle maintains correspondent banking relationships, and takes care of the ‘behind the scenes’ operations including compliance and security, which means companies themselves don’t need to, and can instead focus on growing their business.

Banking Circle members are also able to minimise currency risk through its direct sourcing access to a 15bn Euros daily FX liquidity pool, further improving cash flow management and minimising FX volatility risk.

Get in touch

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