Selecting the Best SWIFT Service Bureau

by Marcus Hughes, Director Business Development, Bottomline Technologies

It can be challenging for treasurers new to SWIFT to make the right choice when selecting a SWIFT service bureau, especially as there are over 125 such bureaus globally used by over 3,500 SWIFT members, i.e., more than one-third of SWIFT’s total membership.

Caveat emptor

With so many bureaus to choose from, treasurers need to be very careful. The following checklist helps narrow down the options:

• Is the provider transparent with its operations? It is essential to know who and what you are dealing with: those large providers who make public filings make more attractive partners than smaller privately owned bureaus.
• Is the provider a strategic player in this business?
• Is running a bureau one of its core competences?
• Has the provider got scale and international reach?
• Are value added services offered?
• Does the provider have key banking relationships?
• Does the provider have the top level bureau certification from SWIFT?

Combination of SWIFT and payments expertise

SWIFT’s top bureau certification, ‘SWIFT Ready Connectivity Best Practice’, has been awarded to only one SWIFT service bureau in the UK, Bottomline, and only 14 others around the world.

It is prudent to select a SWIFT service bureau which is part of a larger payments and cash management solution provider, since such a provider is ideally placed to deliver greater value and meet a wider range of treasurers’ needs in terms of payments and cash management, now and in the future. Similarly, it is important to select a bureau with the scale and financial stability to guarantee not just service continuity now but also that the provider itself will be around in the long term and will continue delivering value and innovation to its clients.

The benefits of selecting a SWIFT bureau with integrated payments and cash management are compelling for any treasurer:

• Visibility over global bank accounts
• Optimised cash and liquidity management
• Cost savings
• Improved security and resilience
• Comprehensive compliance
• Reduced operational risk
• Improvements in straight-through processing (STP) and systems integration

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SEPA, Bacs and Faster Payments

Treasurers considering SWIFT should also ensure that their preferred bureau is SEPA compliant and able to handle Bacs and Faster Payments. The recent announcement of a SEPA mandatory end date of 1 February 2014 will be a catalyst for many corporates to implement payment factories, with SWIFT for bank connectivity. This mandatory deadline will force corporates to take the SEPA initiative more seriously and many will recognise that the best way to leverage the benefits of common standards across multiple countries will be through a payment factory model.

Corporates will be required to use ISO 20022 XML standards to transmit their bulk payment files to their banks. This will be easily managed by payment factories with strong reformatting capabilities which will greatly simplify this requirement without any need to modify the core ERP system. Similarly, a comprehensive payment factory is able to convert Basic Bank Account Numbers (BBANS) into IBANS and add the appropriate BIC, again ensuring compliance with SEPA regulations.

When creating payment factories it is vital to take into account local differences in any markets where the organisation has significant flows of payments and collections. For example, the UK has Direct Corporate Access to Bacs and the Faster Payments Services, unlike most other countries where corporate payment files are submitted to the local automated clearing house (ACH) via their payment banks. It is important to select a solution which incorporates these local requirements in order to benefit from maximum flexibility and the lowest cost routing. The payments managed by a payment factory will be primarily electronic payments, but in North America, UK, France and Ireland it is still important to be able to manage the controlled production and distribution of cheques.

Conclusion

Our advice to a treasurer selecting a SWIFT service bureau is to look for a trusted partner who is more than a bureau: a solution provider with a proven track record of customer success and awards demonstrating the ability to deliver cost effective, flexible and streamlined payments and cash management solutions in a secure, resilient and multi-banked environment.