Optimize Payment Methods

One of the responsibilities of Treasury is to make payments optimally, both in terms of timing (for the debtor and the payee) and the costs incurred. Payment delays can strain relationships with the payee (for example, a supplier) or even put them in financial jeopardy. This can also result in late penalties, which should be avoided as much as possible.

There are two main categories of payments:

• Operational transfers, related to payments to suppliers, taxes, salaries, etc.
• Treasury transfers, related to transfers made within the same Group (for example, between two entities) or related to financings (debt repayments, interest payments, etc.)

The main payment methods are as follows:

Treasury Transfers:

Treasury transfers, identified by the code INTC in SWIFT messages, allow debiting and crediting accounts generally on the same day while avoiding potential bank fees associated with operational flows. This payment method is used for transfers from account to account (two accounts of the same entity), intra-group (two accounts belonging to different entities), and the payment of financial flows such as interest or the principal of a debt, the amount of an investment, etc.

Domestic Payments:

When a payment is made between two accounts domiciled in the same country (or within the same zone, such as the SEPA zone) and in the currency of that country, it should be identified as domestic (SEPA payment for the Eurozone, ACH Credit payment for countries like the United Kingdom, the United States, Australia, Singapore, Canada, etc.). The use of these payment methods significantly reduces fees compared to urgent and priority payments, which should only be used when the payment is not domestic (or if it is urgent).

Whenever possible, domestic payments should be preferred for paying suppliers. Depending on the country, beneficiaries are credited the day after payment validation (SEPA, ACH in the United States or Australia), or even 2 days later (ACH in the United Kingdom).

Foreign Currency Payments:

When a payment is made in a currency other than the account's currency, it is referred to as a foreign currency payment. This type of payment generally incurs substantial foreign exchange fees, which should be identified and measured, especially in the context of considering opening an account in a foreign currency.

Urgent and Priority Payments:

In contrast to domestic payments (sometimes called "Low-value payments"), urgent and priority payments (known as "High-value payments") allow the payee to be credited more quickly. These payments have a high cost (up to several euros, compared to a few cents for a domestic payment). Therefore, they should be used sparingly. Some countries have their own format for urgent payments, which should be preferred over standard urgent payment methods (for example, Faster Payment in the United Kingdom).