Managing Risk and Supporting Growth in the E-commerce Era

Treasury and Trade Solutions 9 1. Governance model and expertise Treasury teams should be engaged in e-commerce initiatives from the onset, however this is challenging to achieve unless treasury’s added-value is known to all relevant stakeholders. Consequently, proactive communication and engagement is key — treasury needs to build its internal brand with e-commerce businesses and stakeholders at group and local levels. Some of the actions that treasury can take to achieve this include: • Regular communication of treasury’s activities and achievements, and the resulting impact/value for the end customer. • Establishing a cross-functional working group with the business and other key stakeholders to regularly review e-commerce initiatives, business needs and challenges, and any emerging risks that could impact the company’s financials. Senior sponsorship (e.g. CFO level) is essential to the success of such a working group. Additionally, treasury needs to build payment expertise within its organisation to support the business in designing and executing its payment strategy. 2. New financial partnerships As businesses look to build their D2C e-commerce presence, they need to establish partnerships with payment providers to support their e-commerce platform. In many companies, treasury does not have a seat at the table when businesses are assessing potential partners for e-commerce payment services. Treasury has a unique opportunity to position itself as an advisor to the business when evaluating new payment providers for e-commerce flows, to ensure business needs are met while potential risks are managed. Some aspects to consider: • Counterparty financial strength. • Adherence to regulatory requirements that could have a spillover effect on the company e.g. General Data Protection Regulation (GDPR), local data privacy laws, etc. • Settlement model — understanding settlement processes and timelines to minimise liquidity risk. • Scalability — ability to support the required services consistently across multiple markets, to prevent fragmented structures that introduce complexity as the e-commerce business scales up. • Financial risk considerations and ensuring adequate mitigants are built into Payment Service Provider (PSP) contracts e.g. security of online payments, fraud management, mitigating against collections from sanctioned countries, and FX risk management where PSP is collecting payments in multiple currencies on behalf of the company. • Data reporting quality and analytics — quality data is critical not only to automate reconciliation, but also to support the business with actionable analytics to improve sales. Furthermore, collaborating with treasury enables e-commerce business units to use treasury’s buying power and relationships with bank partners to make the process of establishing new account structures smoother and achieve better commercial and service terms.