Cash & Liquidity Management
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The Role of COBO as Part of a Centralisation Strategy

by Guillaume Flies, Head of Collections, BNP Paribas

Guillaume FliesBy delegating the power to collect incoming customer payments to a single entity through a single bank account for each currency, ‘collections on behalf of’ (COBO) potentially offers considerable value to corporates aiming to centralise their collections. COBO, and collections centralisation generally, is still too often perceived as a complex process, and its benefits may not initially appear sufficiently compelling for some treasurers and finance managers to develop a strong business case. As the CMU workshop on COBO explored, however, while there are inevitably challenges to overcome, whether legal, operational or organisational, the opportunities, and solutions to support COBO are growing rapidly.

The workshop was moderated by Graham Buck, formerly managing editor of treasury website gtnews, with a panel comprising Guillaume Flies, head of collections, virtual accounts, BNP Paribas Cash Management, Aliette Leleux, finance and risk managing director, Accenture and Marek Chruściel, head of treasury at Play, a Polish-based telecoms group.

Centralisation and COBO

A collection factory acts as a centralised processing centre for accounts receivable (A/R), usually including activities such as account reporting, reconciliation, account posting, credit management and collections administration. The advantages of centralising financial functions are well-documented, including: cost savings through economies of scale and better use of automated technology; standardised processes and controls, and consistent reporting and metrics. Collections on behalf of (COBO) models (i.e., the ability for a single entity to collect cash ‘on behalf of’ group companies, often through a single account per currency) develop these benefits further, with streamlined processes and bank communications, fewer bank relationships, simplified liquidity structures and lower bank charges.