Five Questions to Ask Your International Payments Provider Amid Economic Uncertainty
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Five Questions to Ask Your International Payments Provider Amid Economic Uncertainty

14 May 2020

By Samar Saifi, Business Development Executive, EQGlobal

The COVID-19 pandemic is a uniquely global crisis with the virus able to cross borders indiscriminately – disrupting both the global population and economy. While unforeseen events are, by their nature, hard to predict, businesses have preparations in place for economic uncertainty.

Any business with international activities has to find a way through the chaos to make its payments on time, accurately and without additional cost. Suppliers in markets around the world still have to be paid. Employees working in different countries are depending on their salaries. Pension scheme members who have retired overseas expect to receive an income as normal.

For finance departments already struggling to fight fires on many different fronts, an international payments headache is the last thing they need. Now, more than ever, they need their payments providers to cope with the issues thrown up by the crisis. But is your provider up to the job? Do they have the balance sheet strength, process agility and international reach required to rise to the many challenges posed by COVID-19.

These five questions will help you assess their capabilities – and if you’re not happy with the answers, don’t be afraid to look for alternative providers.

1. How will you cope with increased currency volatility?

Payments providers pay a crucial role in helping businesses manage foreign exchange market volatility. Services such as forwards contracts, for example, enable businesses to lock in exchange rates today in order to make future payments, mitigating the risk of currencies moving against them in the meantime and reducing the potential for cash flow problems.

The COVID-19 crisis has seen volatility increase across all financial markets, including foreign exchange. That not only increases the value of such services, but also makes it more difficult to provide them. In particular, payments providers offering collateral-free trading could be over-leveraged in this situation, leaving them exposed to sudden market movements and leaving your business at risk. Look for providers with strong finances and substantial backing.

2. How will you cope with variable supplier payment volumes?

In this environment, many businesses’ trade flows are much more variable than usual. Sourcing from some markets may be particularly challenging for a period and you may need to make alternative arrangements by ordering elsewhere. Your demand may be fluctuating, requiring significantly less production and output in some industries – especially in shuttered sectors such as clothing retail and leisure – and significantly more in others, such as food retail.

Rapidly evolving events may mean that the payments that your business makes each month – and their destinations – may change markedly. You may have to quickly add new suppliers or book ad hoc payments. How will your payments providers manage this variability and what do they require of you? To what extent can your payment requests be automated and uploaded, rather than requiring manual input? This will be a time when efficiency and speed are of vital importance, so you need a payments provider with agility.

3. Do our employees and pensioners need to worry about their payments?

This is also an uncertain time for individuals as well as businesses and it’s important that your staff overseas, whether current or former employees who are now pensioners, can depend on you paying them as usual. It’s vital that your provider is able to continue making these payments, even in markets where local financial systems have been disrupted.

COVID-19 may cause particular problems here. For example, if you’re varying salaries – because staff aren’t working for a period, say – how quickly can providers update salary runs with mass changes? What if pensioners in certain jurisdictions are now requesting direct electronic payments to minimise contact? Does your payments provider have the expertise and local relationships to manage such issues?

4. Can we depend on you for timeliness and accuracy?

Payments that go wrong put your business’s relationships with key stakeholders, such as suppliers, at serious risk. And late or inaccurate payments are likely to be particularly poorly received in the current crisis when suppliers may already be struggling with other challenges.

It’s therefore vital that you evaluate your payments provider’s ability to continue functioning as normal over the weeks and months ahead, even amid the disruption of the pandemic. What resources do they have in place to ensure that your usual standards of service are maintained? What contracts do you have in place to ensure service quality?

5. What do your business continuity plans look like?

Finally, you’re entitled to ask any business with which you trade for details of its business continuity planning. You need reassurance that your international payments provider will be able to continue meeting your needs even if the current crisis worsens or takes an unexpected turn. Being able to process payments normally regardless of market conditions or current events is vital in ensuring that your people are paid the right amount at the right time, wherever they are in the world. 

For more information on this case study, or to talk through any challenges facing your organisation, please contact us as payments@equiniti.com.