DO TREASURERS REALLY NEED INSTANT PAYMENTS? SOME IMPLICATIONS

Does your treasury have a digital mindset ?
september 26, 2017
Is cash still king ?
juni 14, 2018
Show all

Per 13 January 2018 we have a new payments service directive (nr. 2) live in the European union, PSD2 for short. One part of PSD2 is the possibility for banks to offer instant payments between banks in the EU. Within max 10 seconds money flows from one bank to the other, also on weekends and on holidays. In this paper I want to discuss the implications for treasurers of instant payments.

CASH FLOW FORECASTING
Forecasting is an important part of the daily/weekly routine of a treasurer. He/she needs to predict the future to know his cash/risk/financing position. On the ultra-short term spectrum of this forecast a treasurer might use intraday bank statement (MT942) to take into account the incoming funds during the day. These are often updated hourly. With instant payments a treasurer can have a look at their bank account and the balance that is showing is the real-time balance with all incoming transactions being settled. As said before a treasurer might already have intraday statements but there is (1) a time lag in those and (2) there might be transactions not processed yet. Bottom line this difference amounts to several hours lag. Depending on the size of the company and the amount and size of transactions there is some impact but not very sizeable. Furthermore, those treasurers that do not use intraday balances for their forecasting have no impact of instant payments. However, how about the due payments on non-working days? In the future these are normal payments dates. Previously due payments on weekends are either set on Friday or Monday depending on the terms of the contract. These could now be forecasted on the exact day. But that depends, payments are often done during business hours, so it is possible that nothing changes. Depending on the size of the transactions there is importance to check this with your suppliers and clients. This also depends on bank processing of yourself and your client/supplier.

BANK PROCESSING
Instant means instant in time but also in days. In the past we were dependent on the opening hours of the banks and later of the ECB. That could mean that if we send money just after close on Friday and there was a public holiday on Monday we would only see the money coming in on Tuesday. The money was “lost in translation” in between. This is not very modern in an age where we send an email from Tokyo to South Africa in minutes but not money. We could literally fly there with cash and be faster. After all banks have implemented PSD2 money flows 24/7. So also in the weekend and on holidays.
This has an impact on the processing of your bank statement. You now receive bank statement for Saturday and Sunday. Most accounting/treasury departments do not work on the weekends so there is a chance that these statements are not processed. This means you must process 3 statements on Monday. Some companies have automatic processing of bank statements, so the weekend statements might be processed but not (automatically) consolidated leading to more open positions on Monday.
Ok big deal, there is more work to do on Monday due to more bank statements. But there is more: not necessarily for treasury departments. Think about customer services (helpdesk) departments. If a client with an overdue payment calls it would be great if the helpdesk employee is able to verify statements of the customers if the says he has paid or will pay immediately. This however only works if processing is automatic or if the helpdesk employee can access/search the incoming payments on the bank account (which might not have processed in accounting). Not all companies will have this yet.
Overdue calculations might be faulty in some ERP systems as only working days are considered. If a payment is due on Sunday, you can pay on this Sunday and not necessarily on the Friday before.

CONCLUSION
Instant payments are only a fraction of PSD2 which is often not very interesting for most treasurers. They get some information faster but that does not really help them too much. There is however more to it. Since payments can now arrive and be made in the weekends the cash flow forecasting should now contain 7 days in a week instead of 5. Payment can be spread out more but also receipts will be. Bank processing is more work; 7 daily statements per bank account per week instead of 5. Extra processing or extra automation needed. The extra information might be needed by other departments too even though the treasury/accounting department is not working.
Overall the implications could be bigger then you might think and are different for every company and depending on their existing (bank) processing.
Most bank are planning to introduce weekend reporting by H2 2018 while instant payments are due beginning 2019. For business transactions this might even take until H2 2019.
Some time left but a good time to already think about your current processes in comparison to the new reality under psd2. Treasury is moving to a 24/7 information economy. It’s about time.
Time will tell if there will be fintech’s stepping in helping with above issues with direct connections to the bank, which is another important part of PSD2 but not within the scope of this article.

If you need help with automating your bank statement processing or with your cash flow forecasting, then contact us.

25 Comments

  1. Ирригатор (также известен как оральный ирригатор, ирригатор полости рта или дентальная водяная нить) – это устройство, используемое для очистки полости рта. Оно представляет собой насадку с форсункой, которая использует воду или жидкость для очистки полости рта. Ирригаторы применяются для удаления зубного камня, бактерий и насадок из полости рта, а также для смягчения любых застывших остатков пищи и органических отходов. Ирригаторы применяются для профилактики и лечения различных патологий полости рта. Наиболее распространенные ирригаторы используются для удаления зубного камня, лечения десны, профилактики и лечения воспалений десен, а также для лечения пародонтита. Кроме того, ирригаторы используются для анестезии полости рта, а также для применения антибактериальных препаратов.. Click Here:👉 https://www.irrigator.ru/irrigatory-cat.html

  2. CLAIM SPACE ID AIRDROP 2023 | EARN MORE THAN 1.007ETH | LAST CHANCE https://cos.tv/videos/play/43599695387857920

  3. Anoniem schreef:

    промокод 1хбет при регистрации на сегодня https://reklamalubercy.ru/sites/pgs/besplatnuy_promokod_pri_registracii.html

  4. zoritoler imol schreef:

    Hiya, I am really glad I’ve found this info. Nowadays bloggers publish only about gossips and web and this is actually irritating. A good blog with exciting content, this is what I need. Thank you for keeping this site, I’ll be visiting it. Do you do newsletters? Can not find it.

  5. The Genius Wave schreef:

    It?¦s actually a cool and helpful piece of information. I am satisfied that you shared this helpful information with us. Please stay us informed like this. Thanks for sharing.

  6. Glucotrust schreef:

    I saw a lot of website but I believe this one has something special in it in it

  7. tlover tonet schreef:

    I like this post, enjoyed this one thankyou for putting up.

  8. Hi there, You’ve done an incredible job. I will definitely digg it and personally suggest to my friends. I’m confident they will be benefited from this site.

  9. tlovertonet schreef:

    I’ve read several good stuff here. Definitely value bookmarking for revisiting. I wonder how much effort you put to make this kind of excellent informative site.

  10. buy cbd online schreef:

    Very good written story. It will be beneficial to everyone who usess it, as well as me. Keep up the good work – i will definitely read more posts.

  11. renew schreef:

    Keep up the fantastic work, I read few articles on this internet site and I think that your web site is very interesting and has lots of superb info .

  12. tlovertonet schreef:

    An interesting discussion is worth comment. I think that you should write more on this topic, it might not be a taboo subject but generally people are not enough to speak on such topics. To the next. Cheers

  13. pokemonkarte schreef:

    Hi, Neat post. There is a problem with your website in internet explorer, would test this… IE still is the market leader and a good portion of people will miss your wonderful writing due to this problem.

  14. tlover tonet schreef:

    In the grand scheme of things you’ll get a B- for effort and hard work. Exactly where you lost everybody was first in the facts. As it is said, details make or break the argument.. And that couldn’t be more accurate at this point. Having said that, permit me tell you exactly what did give good results. Your article (parts of it) is highly powerful and that is most likely the reason why I am taking an effort in order to comment. I do not make it a regular habit of doing that. Next, whilst I can easily see a leaps in logic you make, I am not necessarily sure of just how you appear to connect your details which in turn produce the final result. For now I will subscribe to your position however trust in the near future you link your facts better.

  15. Awsome blog! I am loving it!! Will come back again. I am bookmarking your feeds also

  16. Denticore schreef:

    Does your site have a contact page? I’m having a tough time locating it but, I’d like to shoot you an e-mail. I’ve got some ideas for your blog you might be interested in hearing. Either way, great website and I look forward to seeing it improve over time.

  17. Sugar Defender schreef:

    I wish to show some appreciation to the writer just for rescuing me from this situation. As a result of looking out through the the net and finding principles which were not helpful, I believed my life was done. Living without the presence of solutions to the issues you’ve fixed by means of the posting is a serious case, as well as those which may have badly affected my entire career if I had not discovered your web site. Your personal knowledge and kindness in maneuvering a lot of things was precious. I don’t know what I would have done if I had not come upon such a subject like this. I can at this point relish my future. Thanks for your time very much for your specialized and effective guide. I won’t think twice to endorse your blog to anyone who should receive counselling about this subject matter.

  18. Wonderful paintings! That is the kind of info that are supposed to be shared across the net. Shame on Google for no longer positioning this put up upper! Come on over and consult with my site . Thank you =)

  19. alpha tonic schreef:

    so much good information on here, : D.

  20. Prova dent schreef:

    you are really a good webmaster. The web site loading speed is incredible. It seems that you’re doing any unique trick. Also, The contents are masterpiece. you have done a wonderful job on this topic!

Geef een reactie

Het e-mailadres wordt niet gepubliceerd. Vereiste velden zijn gemarkeerd met *