Cash & Liquidity Management

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The Treasurer's Voice: Centralising and Optimising Payments Making payments efficiently, securely and cost-effectively is a priority for every company, but this becomes particularly complex for multinationals with a diverse global supplier base. However, centralisation is not a magic wand. As payments centralisation has been a trend for a number of years, there is often a misconception that all large companies have already embarked on this route.

The Treasurer’s Voice: Centralising and Optimising Payments

by Helen Sanders, Editor

Making payments efficiently, securely and cost-effectively is a priority for every company, but this becomes particularly complex for multinationals with a diverse global supplier base. When reviewing regional and global payment practices, centralising payments into a shared services centre (SSC) or payments factory is a common way of standardising processes, internal technology and banking channels, ensuring a consistent approach to security and control, and achieving economies of scale. Centralisation is not, however, a magic wand for payments efficiency, and the right processes, technology, payment models, banking relationships and account structures are also essential elements. As payments centralisation has been a trend for a number of years, there is often a misconception that all large companies have already embarked on this route. As this survey demonstrates, however, this is not the case.

This month’s ‘Treasurer’s Voice’ was conducted in association with SunGard Corporate Liquidity, and we are pleased to feature comments from Andrew Owens, Managing Director, Global Payments, SunGard Corporate Liquidity. Two hundred responses were received from individuals located in all major regions, including Asia and Latin America. Over 59% of respondent companies had an annual turnover exceeding $1bn. Where the results vary substantially across companies of different sizes, and/or located in different regions, this is indicated accordingly.

1. Degree of payments centralisation

Although the centralisation of payments is a topic often discussed, the results of this survey make it clear that only a minority of companies have yet achieved a high degree of centralisation. Only 34% of companies have centralised payments globally or regionally (30% of companies of >$1bn turnover) while the majority have typically achieved partial centralisation (figure 1). Thirteen per cent of companies have not yet embarked on any payments centralisation initiatives across all respondents, including 14.6% of companies with a >$1bn turnover. The proportion of companies with an entirely decentralised approach to payments is a higher proportion than expected, demonstrating that there is still considerable opportunity for efficiency and control gains. As we mentioned earlier, centralisation alone is not a solution to all payments-related challenges, but it is a proven means of achieving economies of scale and standardising processes and controls when trying to deal with multiple payments functions across the business.

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