The challenge

When a leading shipping client needed to make small payments to its employees across the world, it approached activpayroll to take on the challenge. The client had a request to make payroll disbursements to all its seafarers, as well as the accompanying statutory payments.

The shipping company’s two key objectives were twofold; the optimisation of its working capital by streamlining payroll disbursements, and the simultaneous reduction of fees.

The solution

Leveraging its Hong Kong operations, which began in 2017, and responding to the needs of the shipping company, activpayroll approached its Hong Kong banking team through its relationship manager in Scotland.

The shipping company’s key objectives were to simplify its cross-border payment process, optimise FX management to reduce costs and risk exposure, and streamline its reconciliation process. This also needed to be implemented within the tight deadline set by the client.

The proposed solution combined a global disbursements service from a Hong Kong-domiciled account and a flexible FX rebate arrangement, which proved to be the first of its kind implemented in Asia Pacific, and only the third implemented worldwide.

Best practice and innovation

On the first day of the global disbursements solution going live, activpayroll utilised a single payment file to instruct hundreds of payroll disbursements in four currencies: US dollar, British pound sterling, Euro and Danish kroner.

The implementation matched the aspiration. Two months of concerted effort across activpayroll and its banking partner’s relationship management, cash management implementation and integration and treasury teams, ensured a successful implementation – from a signed statement of work through to its launch, it far exceeded the shipping company’s expectations.

Technology can make errors, and even the most relied upon solution can sometimes make mistakes. So to ensure the smooth receipt of the seafarers’ salaries and a positive customer experience for the shipping company, activpayroll and its banking partner collaborated on ensuring critical care of all incoming and outgoing transactions through the Hong Kong-domiciled payroll disbursement account on the days when payroll disbursements are processed.

In prioritising the ongoing partnership between activpayroll and its banking partner, the goal of ensuring fair pricing for the end customer meant a competitive pricing framework was set.

Key benefits

The global disbursements service with FX rebate simplifies, streamlines and upholds the unspoken agreement that a company pays its employees on time, irrespective of their remote work locations, and in their preferred currencies.

Further benefits include:

• Simplified day-to-day processing of payroll payments.
• Minimised the time spent on disputes.
• The global disbursements service helped activpayroll effect multiple payments from a single bank account. Moreover, multiple payment types in multiple currencies can be instructed through a single remitter file.
• This centralised approach reduces much of the complexity and cost associated with making cross-border payments to multiple beneficiaries in different countries and currencies.
• Global disbursements decreases the number of accounts that need to be held. This simplifies workflows and reduces the time spent managing and reconciling local currency accounts.
• Payment values in either the funding or destination currency can be specified. This enhanced transparency virtually eliminates uncertainty of cross-border payment values – leading to better forecasting and the ability to manage cross-border payment flows more efficiently.