Corporate Payments
VRL Financial News Publishing, January 2012
The increasing number of payments methods available to companies is adding layers of complexity to the corporate payments market. In 2010, 80% of organisations used wire transfers to make payments, and a similar proportion looks set to use them in the future.
Companies of all sizes are looking for ways to save money by streamlining their payments systems, centralising their payments processes, introducing e-invoicing and in some cases, rationalising the number of banks that they hold accounts with. This report gives a full and frank account of the corporate payments market.
Read this report to:
- Gauge the extent to which technology is changing the corporate payments landscape
- Discover the importance of customer service and the availability of credit
- Understand how the announcement of the SEPA end date will bring further standardisation to payments messaging
- Benchmark against case studies of attempts to harmonise payments markets in other regions of the world
Executive Summary
Chapter 1: Introduction to corporate payments
1.1 Attempts are being made to streamline banking relationships and internal processes, but they remain fragmented
1.2 Cash management proesses are becoming increasingly centralised
1.3 Centralisation helps cashflow forecasting
1.4 Short-term financial deficits are increasingly funded by inter-company loans
1.5 Electronic invoicing is gaining in popularity
1.6 Summary
2 Electronic invoicing is gaining in popularity, although from a low base
2.1 The public sector is key to driving adoption of e-invoicing in Europe
2.1.1 Major market segments remained underserved
2.1.2 The market is highly fragmented and the number of service providers is growing
2.1.3 Further harmonisation of messaging formats is required, particularly for cross-border transactions
2.2 E-invoicing is increasing in popularity in the US, but adoption rates remain below those in Europe
2.3 Benefits of e-invoicing
2.4 Barriers to the adoption of eInvoicing
2.4.1 Large companies are significantly more likely to use technological payment solutions than their smaller counterparts
2.5 Summary
3 What does Basel III mean for corporates?
3.1 The objectives of Basel III
3.2 Businesses that demonstrate transparency and understanding will be favoured by the banks
3.3 Businesses expect Basel III to have a negative impact on their performance in 2012
3.4 Two-thirds of banks do not believe that the regulators understand the impact of Basel III
3.5 Businesses will continue to seek alternative sources of borrowing due to tighter capital controls
3.6 Summary
4 Chapter 2: The growth of SWIFT
4.1 Standardisation of messaging is one of SWIFT's key roles
4.2 SWIFT regulation and oversight
4.3 SWIFT has identified an opportunity to connect with smaller businesses through Alliance Lite
4.4 SWIFT is currently dominant but there are threats from new market entrants
4.5 File traffic has grown by just 15% since 2007
4.6 The number of live users is increasing at a steady rate
4.7 Benefits / drawbacks of using SWIFT
4.8 Future growth is likely to come from fast-growing, emerging regions
4.9 Is Asia Pacific moving towards a more harmonized payments market?
4.9.1 ISO 20022 is gaining ground in Asia Pacific
4.9.2 SWIFT: increasing its investment and presence in Asia Pacific
4.10 Summary
5 Are corporates ready for SEPA?
5.1 What does SEPA mean for corporates?
5.2 Switching to SEPA will not be a quick and easy process
5.3 Corporates need to start the switchover process now
5.4 Use of SCTs varies significantly by country
5.5 Growth of SDDs will accelerate now the end date has been set
5.6 Card compliance is progressing well due to the adoption of EMV specifications
5.7 Room for further adoption of SEPA compliant payments amongst European corporates
5.8 Strong stated intentions to switch to SEPA payments
5.9 National CTs are the main form of payments received
5.10 Corporates predict that payments received using SCTs will increase to 2013
5.11 Corporates have not received sufficient information on SEPA
6 The decline of business cheque usage
6.1 Cheques are in decline but still used by businesses
6.2 Larger businesses could benefit from switching to electronic payments
6.3 BACS and Direct Debit are the most convenient alternatives to business cheques
6.4 Cash flow management and tradition are the main reasons for the continued use of cheques
6.5 The cheque will stay in the UK, but its future remains uncertain
Chapter 4: Increasing control and efficiency with payment cards
7.1 Commercial cards – different forms for different purposes
7.2 Transaction cost and payment cycle reduction are two of the key benefits of p-cards
7.3 North America is the biggest market for P-cards
7.4 P-cards are popular amongst middle market organisations
7.5 P-cards are used to purchase ‘every day' goods and services
7.6 Europe and Asia Pacific are less developed than the US, UK and Australia
8 Views from the payments industry
8.1 Corporate payments services
8.2 Risk management is an increasing concern to businesses
8.3 Centralisation of shared services is increasingly important
8.4 The popularity of direct debits continues to grow
8.5 E-payables will also continue to grow in EMEA
9 Treasury management in 2012
9.1 Top ten trends for 2012
9.2 Treasury management will be influenced by four ongoing global trends
9.2.1 Standardisation
9.2.2 Centralisation
9.2.3 Virtualisation
9.2.4 Independence
9.3 Treasury departments have varying degrees of control over payment initiation
9.4 Treasury management solutions are being extended globally
10 Conclusion
LIST OF TABLES
Table 1: Forms of e-invoicing documents
Table 2: Basel III proposal summary
Table 3: Methods of connecting with SWIFT
Table 4: SWIFT Alliance Lite features
Table 5: Initiatives aimed at promoting the adoption of ISO 20022 in Asia Pacific
Table 6: Focus of SWIFT's 2015 Asia Pacific strategy
Table 7: The SEPA project checklist
Table 8: Uses of cheques for business payments
Table 9: Over half of businesses feel that e-payments are convenient alternatives to cheques
Table 10: Benefits of card programmes to organisations
Table 11: P-card programmes – key performance measures
Table 12: Bank of America Merrill Lynch corporate payments services
Table 13: Number of business units authorised to initiate payments by region (%)
LIST OF FIGURES
Figure 1: Corporate payment methods: 2010 - 2013
Figure 2: Average number of banking relationships 2010
Figure 3: Change in the total number of banking relationships 2009 - 2010
Figure 4: J P Morgan 2010 Cash Management Survey respondents by region, 2010
Figure 5: Change in the total number of banking relationships by region, 2009 - 2010
Figure 6: Reasons for ending banking relationships in the US middle market 2009 – 2010
Figure 7: Reasons for ending banking relationships in the US large corporates market 2009 – 2010
Figure 8: Centralisation of cash management processes 2007 - 2010
Figure 9: Barriers to accurate cash flow forecasting 2009 – 2011
Figure 10: Short-term cash deficit handling vehicles 2009 – 2011
Figure 11: E-invoicing adoption by region
Figure 12: Growth of B2B and B2C invoicing 2006 – 2010 (number of invoices, m)
Figure 13: Growth of e-invoicing users in Europe 2006 – 2010 (m)
Figure 14: Number of e-invoicing service providers in Europe by volume of invoices processed 2010
Figure 15: The number of e-invoicing service providers is increasing
Figure 16: Adoption of e-invoicing solutions in the US, 2009 - 2010
Figure 17: Benefits of e-invoicing
Figure 18: Priority placed on discounts by US organisations
Figure 19: Barriers to the adoption of e-invoicing in the US
Figure 20: Impact of company size on the adoption of technology to facilitate payments
Figure 21: Corporate profits are expected to be positive or flat in 2012
Figure 22: Basel III is viewed negatively by Western European treasury professionals
Figure 23: Regulators are perceived to lack understanding of the impact of Basel III on corporates
Figure 24: Euro area corporates face tighter credit standards than SMEs in Q4 2011
Figure 25: SWIFT's net profit has fallen during the global downturn
Figure 26: Change in SWIFT file traffic 2007 – 2010
Figure 27: Change in daily SWIFT file traffic
Figure 28: Steady growth in the number of SWIFT countries and participants 2007 - 2010
Figure 29: SWIFT traffic by market 2007 – 2010
Figure 30: SWIFT traffic by region 2007 – 2010
Figure 31: % growth in SWIFT file traffic 2009 - 2010
Figure 32: % growth in SWIFT inter-regional file traffic 2009 - 2010
Figure 33: Use of SCTs as a percentage of all CTs per country (%)
Figure 34: Growth of SDDs is starting to accelerate
Figure 35: SEPA card payment compliance is progressing well in Northern and Western Europe
Figure 36: SEPA Direct Debits are not used by over one-half of corporates
Figure 37: Use of national payment schemes looks set to decline by 2013
Figure 38: National schemes dominate the primary methods of receiving payments
Figure 39: SEPA payments will increase at the expense of national schemes
Figure 40: Scope for further education on what SEPA means for corporates
Figure 41: Scope for all stakeholders to provide more information on SEPA
Figure 42: Almost one-half of corporates do not have plans to make changes to facilitated SEPA payments
Figure 43: Lack of knowledge is preventing corporates from using SEPA services
Figure 44: Impact of SEPA on payment processing costs
Figure 45: Decline in the number of cheque transactions in US and UK, 2006 - 2009
Figure 46: Cheques are an important payment instrument in the US in particular
Figure 47: Average number of cheques written and received by UK businesses 2008 – 2011
Figure 48: Larger businesses write and receive more cheques than others
Figure 49: Cheques are written to pay regular business expenses
Figure 50: Card payment acceptance increases according to the number of employees 2011
Figure 51: Cash flow management is a more important reason than cost for the continued use of cheques
Figure 52: P-cards reduce transaction costs by 76%
Figure 53: P-cards reduce cycle times by 12.3 days
Figure 54: P-cards are replacing low-value corporate payments by cheque in North America
Figure 55: Cheques are declining in importance for higher value payments
Figure 56: Strong growth of p-card usage within the US public sector.
Figure 57: Office equipment is purchased using p-cards by the majority of US organisations
Figure 58: A lower proportion of organisations use p-cards to purchase services
Figure 59: Commercial cards are more prominent in Western Europe than in CEE
Figure 60: Increase in the value of large value direct debit payments 2005 – 2009
Figure 61: Volume of credit transfers in the Euro area 2005 – 2009
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