by Aymeric Pourchasse, Treasury Advisory Practice, PwC Belgium
SEPA implementation was considered a compliance exercise only a year ago, but corporates and banks are now starting to perceive it as a key enabler for enhanced treasury efficiency and process standardisation. Among the new SEPA-driven opportunities, the collection factory integrating a Collection on Behalf of (COBO) scheme has become an attractive concept, notwithstanding its associated challenges. Although a lot of corporates talk about it, there are very few that have moved ahead so far. So is COBO a myth or reality?
A collection factory with COBO: what is it?
As one would suspect, a collection factory with an embedded COBO scheme is the mirror image of a payment factory with a Payment on Behalf of (POBO) scheme. A collection factory including COBO can be seen as a processing centre in charge of centralising collections of receivables within a single collecting entity, on behalf of other operational entities.
In theory, SEPA allows barriers of cross-border collections to be torn down and makes it almost transparent for the payer who cannot object to the third party collection. Nevertheless, no real benefit arose when weighing up the pros and cons of a COBO scheme up until recently, due to the major challenges associated with the solution.