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Industry roundup: 1 July

EACT supports EC proposals for digital finance and retail payments strategies

The European Association for Corporate Treasurers (EACT) has published its responses to a couple of different European Commission (EC) consultations this week. The first is on a new Digital Finance Strategy for Europe. In its response, the EACT emphasised the importance of balancing innovation with adequate end-user protection when developing a new Digital Finance strategy.

The EACT said that a dedicated Digital Finance Strategy could deliver several benefits to EU end-users of financial services - ranging from harnessing the benefits of more interconnected data flows and more cost-efficient access to financial services to a potential simplification of compliance processes, such as those for AML, through use of digital solutions.

The association also highlighted that a regulatory framework on the use of artificial intelligence (AI) and related solutions such as machine learning and robotic process automation (RPA) could facilitate a greater uptake. Some of these solutions are already starting to be used in corporate treasury and clarifying questions of liability and creating legal certainty for end-users could accelerate this process.

The EACT's second response is to the European Commission’s (EC) consultation on a Retail Payments Strategy for the EU. In the response, the EACT highlighted the critical importance of ensuring top-down regulatory harmonisation across the EU to achieve a true single market for payments and facilitate cross-border payments by corporates. 

The EACT said that it fully supports a regulatory framework that is open to innovation in the payments space. At the same time, to ensure that the benefits of payment innovations materialise, the association urged for the mandatory uptake of, for example, the SEPA Instant Credit Transfer Scheme (SCT Inst) and a wider regulatory push towards the uptake of new solutions such as Request to Pay.

The EACT also highlighted that a widespread uptake of payment solutions such as instant payments needs to come hand in hand with commensurate end-user protection against fraud and mistaken payment flows.

 

Sibos 2020 goes digital, retains original conference dates

SWIFT has announced that Sibos 2020, which was originally planned to be held in Boston from 5-8 October 2020, will now be a free digital event on those same days. There will also be ongoing monthly digital sessions and content running from November 2020, building towards Sibos 2021 Singapore.

Delegate passes for the online conference will be free of charge, to make the event accessible to the financial community during what SWIFT describes as "this exceptional year." Registration for the free access will be required, and opens in August.

The overarching theme of Sibos 2020 will be driving the evolution of smart finance, with each day of the programme focusing on one of our sub-themes. More details on the conference programme will be released over the summer.

The familiar Sibos conference formats will return, including the Big Issue Debates, Views from the Top, Sibos Spotlight and Innotribe.

 

Businesses adapt supplier payment behaviour during COVID-19 pandemic

Businesses have changed the way they pay supplier invoices during the COVID-19 outbreak, according to analysis from Medius, a provider of cloud-based spend management solutions. While the data from Medius global customer base shows that most companies manage to continue operations at a ‘business as usual’ level, many have changed supplier payment routines to manage cash flow and supply chain uncertainties.

Thanks to its cloud-based AP automation solution, Medius can aggregate and monitor anonymised behaviour data from the global customer base to identify how the current pandemic affects operations and supplier payments. For this analysis, the firm reviewed three different datapoints and compared data for March through May 2020 with the same time in 2019. The key findings:

  • Supplier invoice volumes have been relatively stable compared to last year.
  • Supplier invoice transaction values also report at same level as 2019.
  • Days payable outstanding (DPO) shows significant changes.

Days payable outstanding (DPO) is a metric that indicates the average time (in days) that a company takes to pay its invoices to suppliers. For this analysis, Medius studied data from its AP Automation solution comparing the due date on the invoice with the actual payment date. The results show that many companies have changed their payment behaviour during the spring of 2020 by either increasing or decreasing their DPO. This suggests that businesses are using the DPO metric to guide decisions on supplier payment procedures to adapt to the specific challenges caused by the pandemic. The data suggests that companies experiencing limited cash availability have increased DPO, hence paying suppliers later than previously, to manage cash flow challenges during the crisis. Conversely, companies that have a healthy cash position have also changed their payment patterns by paying early in return for discounts or to mitigate supply chain risk. The use of discounted payment terms has increased in line with the decrease in DPO.

 

Kyriba helping Fluor and its suppliers during pandemic recovery

Kyriba has announced that it has helped its client Fluor Corporation, a global, publicly-traded engineering, procurement, construction (EPC) and maintenance company, optimise payment terms during pandemic recovery.

Kyriba’s working capital solutions, such as supply chain finance, have enabled Fluor to optimise payments terms and accelerate free cash flow, while offering early payments to suppliers. Optimising days payable outstanding (DPO) and early payment options can help protect growth objectives from market volatility, while being paid early reduces supply chain risk for the suppliers who provide services to Fluor.

Global organisations use Kyriba to increase their liquidity by optimising DPO or mobilising idle cash to self-fund early payment discount programmes, which the company says can generate returns of up to 15% APR.

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