When a company operates internationally, that usually means new business locations and mergers and acquisitions. As comprehensive processes, these can temporarily undermine an organisation’s manageability.

Janne Antila, Senior Concept Manager with OP Corporate Bank, notes that a complex business environment inevitably impacts on a company’s international cash management and payment.

“Traditionally, payments have been slow, the cost structure complicated, various currencies difficult to use and clarification of issues unnecessarily time-consuming,” lists Antila.

Fortunately, international cash management and payment practices are no longer an obstacle – basic tasks are handled more smoothly than ever. These improvements are welcome to many companies, as the continuously changing global situation demands the ability to react.

World trade marked by the pandemic and protectionism

The Covid-19 pandemic has impinged on international trade for over a year. This has caused turmoil in market areas, supply chains and demand directed through various sales channels.

“The pandemic has highlighted how many companies are dependent on certain suppliers. Sourcing chains can form very large networks on a global scale,” elaborates Antila.

He urges companies to be aware of not only of their own but also their partners’ financial positions in uncertain circumstances. Contingency planning facilitates risk management.

“Well-functioning cash management and awareness of one’s own liquidity position are top priorities. Liquidity must be sufficient in any given situation,” stresses Antila.

In addition to the pandemic, obstacles to free trade and market sanctions have appeared in commerce between countries such as the United Kingdom and its trading partners. According to Antila, Brexit is an example of how protectionism tends to rear its ugly head in international trade.

A positive of this current situation is that digitalisation has provided new possibilities in international payment and cash management. Thanks to the digital leap, the physical locations of markets hardly matter anymore.

Real-time cash management improves payment traceability

In practice, the euro area is the domestic market of many Finnish companies engaged in international trade. Real-time payments can be made, as SEPA credit transfers, in less than 10 seconds.

Currency differences create their own payment challenges, making the follow-up and possible investigation of payment transfers more time-consuming. However, in the Swift GPI network used by OP Financial Group payments are being transferred faster than before – even on the same day.

Antila notes that faster and even real-time payment makes international cash management easier, supporting the entire company’s business. A company’s operational reliability enhances with improved traceability of payments.

“Our customer can monitor their company’s payments on the OP Corporate Hub online service, for instance. A transparent operating model benefits all,” points out Antila.

Although, say, anti-money laundering obligations can slow the movement of money, they have been put in place for the common good. This enables banks to provide better risk control and helps to secure the company’s business continuity.

International payment supported by versatile account structures

The significance of cash and liquidity management is emphasised in international business. Antila proposes new types of multi-currency account structures and virtual accounts as a solution.

“When the tools for international payment and cash management are in order, companies can operate more cost-efficiently and flexibly. Even a more exotic currency is not a barrier to business,” says Antila. 

However, payment involves various kinds of differently priced transactions.

“In practice, there’s no longer a need for different payment methods, as regular payment often works globally,” notes Antila. 

Each globally operating company has specific needs and practices. That’s why OP provides individual support for companies in determining, for example, which type of account structure would be beneficial or how to use various instruments to manage risks arising from a partnership. 

“We want to understand our customers’ business even better, so that we can continue providing efficient tools for international payment and cash management.”

OP Financial Group offers comprehensive cross-border payment solutions for companies’ international cash management needs. Read more