Treasury Strategy & Transformation
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Consumer Brands, Retail and Healthcare Receivables in the Middle East: Doing Things Differently

by Chandra Segaran, Regional Sector Head (Middle East), Consumer Brands and Retail, HSBC

While the Consumer Brands, Retail and Healthcare (CBRH) treasuries in some other regions are leveraging electronic methods for receivables management at a rapid pace, the situation in the Middle East is different. As Chandra Segaran, Regional Sector Head (Middle East), Consumer Brands and Retail at HSBC, explains, there are significant variations in the usage of payment types compared with other regions that make an alternative approach to receivables management necessary. Nevertheless, in the longer term, the Middle East looks set to join the trend towards the digitisation of receivables management.

Cheques and cash dominate

Cheques remain extremely popular in the Middle East mainly due to the level of risk mitigation, where it allows for criminal liability in some countries for not honouring them. From a cheque receiver’s perspective, this provides a welcome degree of certainty, hence the enduring popularity of cheques in the region’s B2B transactions compared with other parts of the world.

Another important factor in the persistent popularity of cheques in the Middle East is the relative cost of issuing cheques. Unlike elsewhere, in several countries in the region it costs less to issue a cheque than a standard electronic payments. Therefore, the strong cost incentive for customers to switch to electronic payments that applies in other regions does not apply in this region. A notable exception to this is Bahrain, where the new Electronic Fund Transfer System (EFTS) offers a highly cost-efficient near real-time service for electronic payments [1].