14 sponsored feature – international


Savings, simplicity, security – the changing face of European payments


The landscape for European payments is changing for the better. David Squibb, Lloyds Bank Corporate Markets regional trade director, explains how SEPA reforms and easier SWIFT connectivity supports companies wishing to embrace more efficient payments, greater control and transparency


There has never been a more interesting time for payments. The reforms we’re seeing are significant and provide companies with huge opportunities to streamline their operations, centralise functions and drive cost savings that will positively impact the bottom line.


Originally conceived as an adjunct to the emergence of the single currency at the start of the millennium, the Single Euro Payments Area (SEPA) revolution has been a major pan-European project and will have a knock-on impact on how businesses settle international trade transactions and manage cash.


European harmonisation


Here in Thames Valley and Solent, we have close relationships with a number of companies headquartered in the region who trade into Europe, and it’s these companies particularly that stand to gain. The payment changes have been driven by the creation of SEPA back in 2000, which encompasses the 32 countries within the European Union, as well as Iceland, Liechtenstein, Norway and Sweden.


SEPA’s aim is to simplify how payments are made throughout Europe through the creation of a standardised set of euro payment instructions, covering credit transfers, direct debits and card payments. The idea is that we will end up with a common set of technical standards, common business practices and a harmonised legal framework.


Simplified credit transfers were introduced in 2008 and are being adopted by increasing numbers of businesses that recognise the immense benefits. Rather than negotiating different domestic clearing systems throughout Europe, SEPA is harmonising the separate strands so that payments can be set up in the same way, regardless of country of destination. As a result, companies can enjoy low-cost, non-urgent payments within Europe. And in terms of cycle times, the current maximum four days is set to reduce in time to a next working day service from January 1, 2012 – faster than the current UK BACS clearing system.


Lowering costs


Effectively, companies can now pay their suppliers throughout Europe in euros using just one system, rather than having multiple bank accounts located around Europe or using more expensive urgent transfer methods or cheques. This hugely simplifies existing accounts payable functions, because payments can be made from one account, in one country, to anywhere in Europe.


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What we’re seeing increasingly with the centralisation of payment functions is a mixture of approaches from businesses. Some are completely centralising the function using one account with one bank, whilst others are using technology to give their local European offices access through the Internet to the Bank’s payment platform, with authorisation through their UK HQ, centralising control over all accounts payable and harmonising terms and conditions.


Another advantage for businesses is that they can make much better use of their cash resources by reducing the amount of cash ’trapped’ in overseas accounts by pooling balances together in one place with one bank, resulting in better interest earnings on deposits, reduced borrowing costs and lower transaction fees. Some of the businesses we deal with here at Lloyds Bank Corporate Markets can have between five and 40 bank accounts across Europe, which ties up large amounts of valuable cash that could be put to better use, and is time consuming to administer.


Cashflow certainty


SEPA Direct Debiting has been implemented here at Lloyds Bank Corporate Markets and we can now offer customers the ability to be both debtors and creditors for direct debits on a pan- European basis, bringing greater certainty over the timing of cashflows.


In addition, this service simplifies procedures for the accounts receivables function in terms of managing different types of payment, reconciling receipts, and so on. SEPA Direct Debiting does away with all of that – funds can be claimed back into a central account, facilitating considerable cost savings and offering predictable cashflow.


Increasingly, we’re seeing this as a key part of new business enquiries. It’s a service we’re comfortably able to provide at Lloyds Bank Corporate Markets, having ensured that SEPA is an integral part of our existing web-based services.


Driving efficiency


We’re seeing another trend with our largest customers, who are increasingly wishing to communicate with us using Society for Worldwide Interbank Financial Telecommunication (SWIFT), the telecommunication service used between banks and other financial institutions for over 30 years. That service has now been opened up to corporates, enabling customers to interface their Enterprise Resource Planning (ERP) systems directly with banks whilst benefiting from the security aspects of SWIFT. Again, it’s about


Steve Clarke, area director


increased efficiency, straight through processing and reduced risk.


Given that Europe is one of our main trading partners, we’re actively encouraging businesses to consider how much they have to gain from the new payments landscape. There’s never been a better time to capture cost savings, centralise functions and look at things in a new way.


To find out more about how Lloyds Bank Corporate Markets can support your changing business needs, contact David Squibb or Steve Clarke, details below.


Details: David Squibb 0118-9196562


Steve Clarke 0118-9219192


David Squibb, regional trade director


THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – APRIL 2011


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