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Driving Success: Taking the Lead in Real-Time Payments and Collections The 2019-20 Journeys to Treasury Report suggests that that strong regulatory pressure and rising consumer demand are laying the foundations for the standardisation of real-time payments, a reality that treasurers must play an active role in preparing for.

Driving Success: Taking the Lead in Real-Time Payments and Collections

Driving Success: Taking the Lead in Real-Time Payments and Collections

By Eleanor Hill, Editor


In the real-time era, treasury is well positioned to influence a company’s payment and collection strategies, including evaluating the costs, risks and opportunities of accepting different payment methods, potentially helping to drive new, competitive business models.

Journeys to Treasury

About Journeys to Treasury

2019 marks the fourth edition of the Journeys to Treasury report – authored by BNP Paribas, PwC, the European Association of Corporate Treasurers (EACT), and SAP, featuring input from leading corporate treasurers.

The report offers rich, diverse insights on the trends, challenges and priorities that are shaping best practices in treasury both today and in the future.

Visit journeystotreasury.com to download the complete report.

There are now 44 domestic real-time payment schemes in live operation globally with a further 14 planned. At the same time, mobile wallets are becoming increasingly common in parts of Asia, Africa and Latin America. These developments have important implications for treasury; however, too few treasurers are playing an active role in the company’s payment and collection strategy, according to the 2019-2020 Journeys to Treasury report.

In many instances, the choice of payment, and particularly collection method, is a commercial decision made by sales and customer engagement teams, most notably in businesses that operate on a business-to-consumer (B2C) basis. However, treasurers should be involved in these decisions to consider key issues, e.g. payment and collection costs; operational and credit risk; resilience; technology integration; working capital and liquidity; and sustainable growth. Furthermore, new payment and collection instruments have the potential to create valuable opportunities for the business, particularly as digital business models evolve.


Creating value

One corporate that is well aware of the value of such opportunities is online fashion retailer Zalando. As Marco Arosio, Head of Treasury, outlines in a case study contained in the Journeys to Treasury report: “Customers’ ability to use their payment method of choice is key to removing friction and enhancing the purchasing experience, therefore increasing conversion rates and sales revenues. Similarly, timely, efficient payment to the 2,000 brands that supply Zalando, and its business-critical service providers, is a vital factor in ensuring reliability of supply.”

He continues: “As a digital retailer, it is in our DNA to create a seamless experience for our customers, which includes both payments and refunds. We need to support the payment methods that our customers want to use; however, we balance this objective with the need to remain cost-effective and operationally efficient.”

On the subject of real-time payments, Arosio says that Zalando is keen to be an early adopter. “Although banks are at different stages of innovation around instant payments – and critically, instant information – we see significant value both for payments and collections. End customers gain better certainty and traceability of payments and refunds, while in treasury, we can manage working capital dynamically rather than waiting for statements to be downloaded. We are already working on a pilot project with our partner bank to integrate real-time payments and real-time data into HANA,” he notes.


Taking the reins

For those treasurers wondering how to begin evaluating the potential of real-time payments and collections, the Journeys to Treasury report lists some helpful use cases (see fig 1).

 

Fig 1: Real-time payments and collections – corporate use cases

Real-time payments

  • ‘Just-in-time’ supplier payments
  • Emergency expenses payments
  • Contractor, freelancer and publisher/ licensor fees
  • Insurance policy payouts and compensation
  • Refunds
  • Emergency or relief payments

Real-time collections

  • Online and mobile purchases
  • Services, rentals and subscription payments
  • Utilities and contract payments
  • Deposits or consumer payments for high value items e.g. vehicles
  • Alternative to cards and/or direct debits, particularly in markets where these are less prevalent


Of course, alongside the opportunities, there are important treasury implications to consider as payments and collections increasingly take place in real time, 24/7, including in areas such as organisation, technology and integration, processes and liquidity (see box for example considerations).

 

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