Cash & Liquidity Management
Published  6 MIN READ
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Turning Obligation into Opportunity

by Pierre de Montessus, Global Corporate Banking  SVP, Global Treasury Solutions, EMEA, Bank of America Merrill Lynch

In less than a year’s time, almost every corporation in France will be obliged to migrate from ETEBAC, the protocol used for data exchange between corporations and banks. While some companies have already planned or commenced their migration, many others have not yet established their strategy. While it may appear inconvenient to have to select and implement an alternative connectivity method for bank communication, corporate treasurers and finance managers should consider this as an opportunity to enhance cash and treasury management processes, and improve working capital metrics. For example, centralising cash and treasury management activities, optimising processes and adopting Single Euro Payments Area (SEPA) payment instruments can all deliver significant benefits. However, with a number of projects competing for resources, it can often be difficult for treasurers to gain internal support. Consequently, the need to change connectivity methods can be a catalyst for change and a trigger for delivering greater value to the organisation.

Connectivity choices

With the termination of ETEBAC in September 2011, corporates in France, and French subsidiaries of foreign companies with local cash management needs, have three alternatives for bank connectivity. Domestic, single-banked corporates are likely to move to their bank’s proprietary, web-based electronic banking system. Others will be more attracted to Electronic Banking Internet Communication Standard (EBICS), originally a web-based protocol developed in Germany that has been amended to provide an alternative to ETEBAC. While the German and French versions of EBICS are not yet harmonised, this is likely to happen in the future, and has the advantage that it supports existing file formats used in France, in addition to ISO 20022 messages used for SEPA payments. The third alternative, that is already proving the most attractive for internationally active and/or multi-banked corporates, is SWIFT Corporate Access. At Bank of America Merrill Lynch, we are well-equipped and experienced in helping corporate treasurers and finance managers to determine the right connectivity method for them, to plan migration and to identify and deliver improvements to cash and treasury management processes.

Strategic advantages of SEPA

One such opportunity is the implementation of SEPA payment instruments: SEPA Credit Transfers (SCT) and SEPA Direct Debits (SDD). Both of these instruments offer a proven alternative to existing domestic payment types, with the advantage that the same instruments can be used across the Eurozone, without the cost and complexity associated with cross-border payments. For domestic euro payments too, bank charges are reduced as transaction fees for SEPA payments are lower than their ACH equivalent. Although it is not yet mandatory to implement these instruments, a 2012 migration deadline is widely anticipated.

The need to change connectivity methods can be a catalyst for change and a trigger for delivering greater value to the organisation.