Scaling across borders? Your single global bank account may be slowing your cash

When centralising global collections creates payment friction for customers and slows the conversion of receivables into usable cash.

On paper, collecting international payments into one global bank account makes a lot of sense.

There are fewer accounts to manage, fewer banking relationships to oversee and one place to see your money. The problem is that this simplicity can come at the expense of the customer. Your treasury operation is easier to manage, but you’ve made yourself harder to pay.

When customers in several markets are all asked to send money to the same overseas account, payments that could have been domestic suddenly become cross-border. That can mean unfamiliar instructions, bank charges, currency conversion, additional approvals and longer settlement times.

One account for you, but lots of opportunities for friction.
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Centralisation solves only one side of the transaction

Treasury teams understandably design collection structures around control, visibility, liquidity and efficiency. On the other hand, customers want familiar account details, the ability to pay in their preferred currency and a process that fits into the systems and workflows they already use.

Paying an overseas account can mean setting up and verifying a new international beneficiary, seeking additional approval, arranging foreign currency payments and working out who will bear any intermediary bank fees.

None of those steps are impossible, but each one creates another reason for the payment not to happen today.
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Payment friction becomes a working capital problem

The most visible consequence of a difficult collection process is usually an email from a customer asking for help, but more important is what this does to cash flow.

Payments can be held up while customers confirm instructions, resolve currency questions or get permission to send money overseas.

Then there could still be problems after payments are sent. Fees deducted along the way can result in short payments, while missing or altered references can stop funds being matched to the right invoice.

That gap creates unapplied funds, manual investigations and less reliable cash-flow forecasts, as well as customers getting reminders for invoices they've already paid.

Not a great experience for either side.
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When payment delays create a financing dependency

Where a supplier can't wait for funds to work their way through a slow or uncertain international payment process, they might need financing to tide them over. Banks will often offer a letter of credit, so the supplier can get paid before the customer’s funds arrive.

Letters of credit solve the cash flow issue but they can be the devil for companies' payments negotiations, as banks may lock them into FX rates that are less competitive than they might find elsewhere.

Businesses should ask whether they are using financing to solve a risk problem, or simply to compensate for a payment process that takes too long.
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Central visibility doesn’t require one payment route

The better answer isn't to open a traditional bank account in every country where you have customers.

Named accounts, also known as virtual IBANs, let businesses transact in local currencies without having to open local bank accounts - with account details in their own name. Multiple virtual IBANs can be created in different currencies and attributed to different customers, all sitting under one master account.

Named accounts make things easier for customers because they can use local banking details and pay in their own currency, whilst suppliers can manage all their international collections in one consolidated account.

Businesses get the benefits of centralisation without forcing every customer down the same payment route.
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The real cost of single account collections

Not every market needs a separate arrangement - a single account may work fine for occasional payments. But there are warning signs that the model is creating more cost than it saves.

Customers repeatedly asking for local account details is one. Deducted bank fees, slow settlement, high levels of unapplied cash, frequent investigations and poor automatic matching rates are others.

Businesses should look beyond account-maintenance fees and consider the full cost of collecting money. That includes delayed cash, reconciliation work, customer support and any financing needed to bridge the gap.

A single global account may be operationally neat, but that doesn't mean it's efficient. The strongest collection structures make it easy for customers to pay while still giving treasury and finance teams the visibility and control they need.
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Build collections around the way your customers pay

APA has spent years building the infrastructure needed to make local collection possible across multiple markets. That includes licences around the world, banking and liquidity partners, payment rails and multi-currency account capabilities.

This lets us help businesses design collection structures around their customers, currencies and operating markets while retaining central oversight.

If your customers are making international payments to settle what should feel like local invoices, it may be time to review the structure behind them.
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Speak to APA about building a more effective international collection model.