Trésorier/Treasurer magazine - N°90 - July/Aug/Sep 2015 - (Page 54)

15 MINUTES WITH... INTL FCStone Cross-border commerce for the 21st century When assessing its cross-border payments needs, the average organisation assesses 3 main points: LE MAGAZINE DU TRESORIER / TREASURER MAGAZINE - N°90 - JULY / AUG / SEP 2015 1- How can I make payments with any certainty (as to the final amount delivered and delivery date) without having an account in the payment currency? 2 - How much will it cost? Am I sure there are no hidden or extra costs? 3 - Is the proposed solution easy to use? 54 Each organisation will give different weighting to different factors, depending on which is the most important to them, but in each case they will ultimately need to have an answer to all 3 of these issues. Here at INTL FCStone (INTL) we have approached these questions in turn, as we attempt to remove the headaches of cross-border payments from Corporate Treasury teams across the world. We also throw one more question into the mix for the reader to consider: does your provider have the sufficient currency reach to meet your transfer needs? To provide our perspective: we have been a specialist provider of cross-border payments since 1986. In that time we have built up an impressive customer base that now includes many of the world's leading transaction banks, who use our expertise in the developing world to complement their own coverage in more developed markets. With the globalisation of trade we are witnessing explosive growth in the number of payments from the developed world to emerging markets. At the same time governments, regulators and commercial actors increasingly favour payments being executed in local currency and discourage the use of Dollars to settle local obligations (in non-Dollar countries). So how can we help address these various challenges? Well firstly, unlike many other providers in the cross-border space, we run our own network of local correspondent banks across the world. Instead of relying on one or two global banks, we actually transact in the local target market of the intended payment, engaging local banks, a specialist in that market, in order to secure a fixed, low cost (as all payments travel across local clearing mechanisms, rather than arriving as cross-border wires) and clear, guaranteed delivery times. It is also true that having a local partner in the target market reduces the complexity and layers of any investigation into failed payments, significantly reducing investigation timelines. Our team quotes an upfront, fixed cost (in the form of an FX rate, with an agreed spread) for the transaction at hand, guaranteeing both a) that the payment will arrive whole, with no charges or lifting fees deducted and b) the delivery date of the local funds. By interacting solely with local banks, we are able to ensure highly competitive exchange rates. All of this is supplied upfront in a transparent manner, putting the ordering customer in control of its costs and helping avoid the problem of payments arriving to the beneficiary with a shortfall, requiring complicated reconciliations and resending of funds. Further, this enables suppliers to bill in their home currency, removing the need for the conversion-risk premium so often inherent in USD billing and allowing for more transparent cross-border pricing of goods and services. Due to the large numbers of transactions that INTL FCStone handles on behalf of the global banks, we have achieved economies of scale in many of the developing markets that is hard to replicate. This helps explain why many of the world's largest banks have concluded that it is preferable to use our payments services for the developing world, as opposed to running a higher cost service themselves. Further, with the significant investment in technology over the past 4 years, our team is able to offer a highly simplified process to companies, offering auto-pricing of FX transactions, validation of payment instructions and straight-through-processing at the click of a button in 175 currencies. INTL FCStone As a case study, we work with a leading global insurance group that needs to make multiple local currency payments all over the world. This company makes over 3000 cross-border payments, in 52 currency pairs on a monthly basis to locations where they do not hold a local currency account themselves. They are able to upload these payments in one file directly into our pricing and payments system, Fxecute. The system auto-prices the FX deals, validates the instructions and notifies the ordering customer once when the transaction settles. Our software receives the instruction and makes the payment directly to the ultimate beneficiary, saving the ordering customer the time and expense of running their own local currency accounts in developing markets, without suffering any loss of certainty or transparency in the process. With access to this technology, coupled with an extensive network of over 300 local banks across the world, companies are able to engage in cross-border business to anywhere in the world, making local currency payments almost as simply as domestic payments in their own markets, for a known, guaranteed cost. Global commerce has never been so easy. All you need to do now is decide where you want to do business next!

Table of Contents for the Digital Edition of Trésorier/Treasurer magazine - N°90 - July/Aug/Sep 2015

Cover
Table of contents
EDITORIAL
FINANCIAL HIGHLIGHTS Luxembourg Tax News
INTERVIEW DataLog Finance
FOCUS
What do financial leaders around the world earn?
BIG DATA in treasury
Credit rating agencies in the line of fire?
FORUM
Hedge accounting: New standard, new challenges
Cyber Risk: Can Insurance be an Answer?
When FX Volatility hits your Corporate Earnings - How
Best to Manage your Currency Risk
Repo cash management - how it works in practice
20 ans de AXA IM, l’histoire continue
CORPORATE FINANCE
Time for more sophisticated corporate investment strategies
VAT electronic audit file: not too late to act, but no more time to lose
Focus sur l’actionnariat salarié
Struggling with cash forecasting? You are not alone
Coupling Delegation of Authority (DOA) with Bank Account Maagement (BAM)
15 MINUTES AVEC INTL FCStone
THE RISK OBSERVATORY
NEWS
LIFE BEYOND NUMBERS

Trésorier/Treasurer magazine - N°90 - July/Aug/Sep 2015