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Exploring new frontiers: how payment certainty propels businesses across borders

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Exploring new frontiers: how payment certainty propels businesses across borders

By Sean Norris, Executive Vice President EMEA & APAC, Accuity and Meredith Wisniewski, Portfolio Marketing Manager, Accuity

Operating in a global landscape

Sean Norri

Sean Norri

In today’s competitive and globalised business landscape, companies are increasingly seeking new frontiers for expansion. In a recent piece of Accuity research, 69% of business leaders revealed that their companies will be branching into new geographies within the next year[i].* While the aspiration of international expansion may be compelling, it is important to take into consideration that doing it successfully requires more than just ambition and a popular product. Conducting business abroad entails onboarding new clients, vendors, suppliers, and contractors. It requires building local rapport, adapting to new cultures, and establishing a unique brand in diverse contexts.

Conducting business internationally also demands completing timely, accurate payments to local companies and understanding foreign regulations and payment processes. Many of the same organisations that wish to expand their global footprint struggle with cross-border payment challenges.

In the same 2017 study, an overwhelming majority of executives felt that delivering accurate, timely payments presents a challenge to their plans of global expansion. Specifically, 61% stated that new business opportunities could not be taken because payment processing is too challenging. 81% acknowledged that payment inaccuracy has a direct effect on success and growth. Unsurprisingly, then, the study reported that 64% of corporate professionals want to improve the efficiency of their payment operations.

The hidden complexity of payments

In a world in which Amazon can promise same-day deliveries of even the most obscure consumer goods, it may come as a surprise to some that electronic money transfers are not entirely automated and not always successful. On the contrary, as the survey has confirmed, ensuring accurate, timely payments remains a substantial obstacle to many businesses. Despite the clarity of the survey results, it is not immediately obvious why payment processing is so difficult, and in fact, some of the toughest challenges may not even be evident to corporations themselves.

Processing global payments is surprisingly complex. While businesses can learn to navigate domestic systems over time, to accomplish the same globally is an entirely different task. There are three key challenges involved in completing international payments, and the degree of complexity increases at each level:

  1. Payment protocols differ by location. Diverse regional regulations guide payment processes, and a number of countries even require information in local languages.
  2. Within any one region, various clearing and settlement systems may exist. For example, in India, the Real Time Gross Settlement (RTGS) system is used for gross settlements, while the Electronic Clearing Services (ECS Credit and ECS Debit), the National Electronic Fund Transfer (NEFT) system, and Immediate Payment Service can be used for net settlements.
  3. Any one payment transaction requires different codes to successfully complete the transfer. These may include IBAN, SWIFT/BIC, and local system codes.

To ensure payments are timely and accurate, companies must master all of these facets. Thus, navigating the payments arena can seem almost impossible without expert knowledge, especially when companies are focusing on growth.

To add to the challenge, national and regional payment codes undergo occasional changes as a result of mergers and acquisitions, bank or branch closures, revisions in regulation, and administration changes. These adjustments to payment systems or codes can be difficult to predict and keeping up to date can often feel like a tireless manual task. For example, in Western Sahara, financial institutions use the Moroccan local clearing system, while in Rwanda, the Central Bank recently decided to replace three-digit payment codes with five-digit codes. In either case, if a business was not aware of these changes, payments into these regions could be delayed.

For firms considering expansion, even understanding basic payment protocols and the use of various payment systems can be challenging — so acquiring and maintaining accurate codes and navigating diverse and complex payment routes is a daunting task.

A price too high to pay

Meredith Wisniewski

Meredith Wisniewski

Corporations consider payment processing as a major obstacle to conducting business internationally because transaction failures come at a high cost.

There are immediate, monetary consequences of failed payments, including considerable rejection and repair fees. Payment failures can cost $5-$50 per transfer, and each reconciliation may require 20-30 minutes’ administrative work. Often, extended delays result in additional fees and higher research costs. Treasurers, operations personnel, and master data managers must devote considerable time to resolving these complications, thus limiting their capacity to focus on other pressing tasks.

Other consequences are indirect. In terms of treasury operations, delayed or missing payments can affect liquidity management by lowering cash visibility. Poor management can in turn negatively affect an organisation’s bottom-line. Moreover, because companies are often unaware that a payment has failed until the issue has already manifested into a serious problem, these difficulties are further exacerbated.

Some companies may choose to dismiss these monetary charges as overhead or ‘just the cost of doing business’. Yet, there are other side effects that businesses cannot ignore. Failed payments can cause irremediable supply-chain disruptions. For example, imagine a major consumer retailer places a bulk order for shopping carts before a new store opening. Imagine that the payment failed, but no one discovered the transaction was incomplete until the night before the grand opening. The next day, there are no shopping carts for customers. Such a disaster would significantly damage the retailer’s relationship with its cart vendor as well as the location’s reputation with its customers.

Most importantly, companies need to recognise that establishing global relationships that depend on accurate payments comes with high reputational risk.

Businesses of all sizes must strive towards fast, timely payments as a standard. As customers (as well as vendors, suppliers, and contractors) are often unware of the difficulties involved in processing payments, a history of failed payments can lead them to doubt a company’s operational efficiency as well as its ability to deliver on its promises in other areas.

Best practice steps to payment success

Despite the numerous challenges discussed, ensuring accurate, timely payments can be simple. By investing in proper data management systems and implementing standardised protocols for payment processing, companies can significantly mitigate the risk of bearing heavy financial and reputational costs.

Corporations should follow two best practice steps to become more equipped to handle the challenges of payments processing:

  1. Improve the company’s payments data. This means understanding the types of data required and creating a standardised method of organising existing data and collecting new information. Companies should also draft procedures for conducting research and repairs, so as to save both time and money. With these standards in place, businesses will be far more prepared to face the myriad of challenges that exist in the payments arena.
  2. Integrate the data into an Enterprise Resource Planning (ERP) system and automate the payment process. Smooth integration and full automation will enable faster payments and streamline the onboarding process for new customers, vendors, suppliers, and contractors. Success in this area will provide businesses with the groundwork to build lasting relationships.

By overcoming the obstacles, businesses will be able to enter new geographies and feel confident that they have the ability to successfully complete transactions with any regional counterparty.

Finance

SH Capital Ltd launches in Dubai to support SMEs with global banking services

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SH Capital Ltd launches in Dubai to support SMEs with global banking services 1

Fintech provider to reconnect businesses with international banking services, digital treasury management solutions, risk management and cash investment products

A new digital treasury services management provider SH Capital Ltd (SHC), launches in Dubai today with a plan to empower small and medium sized enterprises (SMEs & MMEs) by offering world class global banking services, asset management, FX hedging solutions, investment products and services.

SH Capital is a subsidiary of parent company Stanhope Financial Group, which launched with $3.5m funding in November last year.  In December, the group also announced the launch of its EU headquarters in Lithuania after obtaining its Electronic Money Institution licence.

The independent fintech firm, which has received its in-principle approval Cat 3A regulatory licensing from the DFSA, Dubai, is set to begin trading as of end of Q2’21, with a mission to help companies meet their financial goals during the Covid-19 recovery.

SHC will act as an intermediary for clients, helping them to access leading and global tier one cash investment products. The Stanhope team of leading industry experts will also advise on commercial paper, money market funds, futures, options, ETFs & FX hedging solutions.  Additionally, SHC has already partnered with a number of global counterparties, exchanges and e-trading venues to provide liquidity in the equity, FX, fixed income and commodity markets for all clients.

In spite of recent market volatility due to Covid-19, SHC are also committed to providing bespoke financial strategies for companies as matched principle, designed to meet their risk tolerance and position them ahead of the curve for both short and long-term financial goals.

To do this, SHC leverages the latest RegTech and blockchain technology, which helps to significantly reduce CBR risk and service friction, whilst maintaining a fast, secure and transparent service.  More specifically, AML, KYC, trade monitoring and a distributed ledger technology are just some of the technology utilised for an efficient and safe execution of service.

Speaking to Global Banking and Finance Review, Khalid Talukder, Managing Director, SH Capital Ltd, said: “For ambitious businesses within the GCC, getting multi-product access and global reach of investment instruments and solutions will be a critical priority for 2021 and beyond.

“Key to SH Capital’s offering is that we have the ability to aggregate high tier one investment solutions in a single venue, delivered digitally through our platform. This gives clients a greater choice and reach over the instruments that they can invest in, as well as our ability to help create a bespoke portfolio on a client-by-client basis through our holistic approach to client service. “

“Dubai is quickly being recognised as a global hub of fintech and innovation, being home to some of the fastest growing, most exciting firms on the planet.  With postponed Dubai Expo launching in the Autumn of 2021, we are perfectly placed to support these business to maximise this global showcasing opportunity.

Many of these businesses struggle to gain access to efficient and high quality digital asset management and investment products globally to support their treasury activities.  We aim to provide a fully digital service offering via our platform allowing easy access to various cash asset management products, services and investment products that they need in order to thrive in an increasingly competitive global world.

SH Capital Ltd will change all that, reconnecting these fast-growing firms mid-market corporates which are the backbone of GCC commerce with the products offered by Tier 1 financial institutions, as well as offering treasury consultancy to take them to the next level.

With over 70 years combined experience in our team of financial professionals, shared with quantitative-driven data insight, regulatory technology and blockchain, we are confident we can provide a consistent treasury management service, free from delays, security issues and unfair charging, to all firms in need of assistance during this difficult Covid period and beyond.”

Kevin von Neuschatz, Group CEO, Stanhope Financial Group added, “We’re excited to have received our operating licence and formally launch SH Capital Ltd in Dubai. Our on-the-ground team of experts will begin trading immediately, providing ambitious businesses across the region with tier one banking and payments services to enable rapid growth during an incredibly challenging time.

This is the first of many expansion plans for the Stanhope Financial Group, with similar launches in Europe and other key regions in the first part of 2021.”

 

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Finance

Daily Mail publisher posts 15% drop in quarterly revenue

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Daily Mail publisher posts 15% drop in quarterly revenue 2

LONDON (Reuters) – The publisher of Britain’s Daily Mail newspaper said that group revenue fell 15% in the three months to the end of December, dragged down by falls in print advertising revenues at its papers and by cancellations in its events business.

Daily Mail and General Trust said that group quarterly revenue came in at 304 million pounds ($416 million), down 15% on an underlying basis, but excluding the impact of cancelled events it was down 5%.

At its newspapers, print advertising revenues fell 38%, compared to an 8% rise in digital advertising. The group said that the impact of the pandemic meant it was difficult to provide short-term forecasts.

($1 = 0.7301 pounds)

(Reporting by Sarah Young; editing by Michael Holden)

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Dollar slides vs. most currencies on optimism about Biden administration

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Dollar slides vs. most currencies on optimism about Biden administration 3

By Gertrude Chavez-Dreyfuss and Saqib Iqbal Ahmed

NEW YORK (Reuters) – The dollar fell against most currencies on Wednesday, as risk appetite held up on optimism about a massive stimulus package under the new Joe Biden administration that will likely bolster a U.S. economic recovery.

The greenback slid against the yen as well as currencies tied to commodity prices such as the Australian, Canadian, New Zealand dollars, and the Norwegian crown. The U.S. dollar dropped to a three-year low versus its Canadian counterpart and sterling, while hitting a two-week trough against the yen.

The S&P 500 climbed to a new all-time peak, while U.S. crude futures gained as the risk rally carried on.

Biden was sworn in as the 46th president of the United States on Wednesday, vowing to end the “uncivil war” in a deeply divided country reeling from a battered economy and a raging coronavirus pandemic that has killed more than 400,000 Americans.

The new government is expected to push through Congress a nearly $2 trillion U.S. fiscal stimulus plan.

“Once you are no longer uncertain about something and it materializes, the overall optimism grows and gives way to the global recovery narrative,” said Juan Perez, senior FX strategist and trader at Tempus Inc. in Washington.

“The election and the issues after — all of them played a dramatic role, but now it’s over. Joe Biden is president and stimulus hopes are, like some markets, at a record high,” he added.

In afternoon trading, the dollar fell 0.4% against the yen to 103.54, sliding to a two-week low earlier in the session to 103.45.

The U.S. dollar tumbled to a three-year low versus the Canadian currency at C$1.2607, after the Bank of Canada on Wednesday opted not to cut interest rates. The greenback was last down 0.7% at C$1.2642.

The Aussie dollar rallied 0.6% to US$0.7745, while the New Zealand currency also gained 0.6% to US$0.7167.

Sterling rose to a three-year high versus the dollar of $1.3720, but surrendered some of those gains to trade up just 0.1% at $1.3643.

A combination of heightened risk appetite in global markets and UK-specific optimism lifted the pound on Wednesday.

The dollar index, meanwhile, was up 0.1% at 90.483. Since the beginning of the year, the index has posted a modest 0.5% gain.

Futures positioning data still shows that investors are overwhelmingly short dollars as they figure that budget and current account deficits will weigh on the greenback.

The euro fell 0.2% against the dollar to $1.2106.

European countries are struggling to contain the contagion of the coronavirus amid worries that a new variant could lead to more stringent lockdowns and more economic pain.

Investors are also fretting about the slower pace of the rollout of vaccines relative to the United States and Britain, which may hobble economic recovery in the euro zone.

(Reporting by Saqib Iqbal Ahmed and Gertrude Chavez-Dreyfuss; Editing by Mark Heinrich and Sonya Hepinstall)

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