While the pandemic has created unique circumstances of immeasurable strain and pressure on the global market, it’s also emboldened many to rise to the occasion and ensure business continues to flow with as little disruption as possible.
Preserving trade flows of particular importance in the healthcare sector today, with cross-border B2B payments essential to this effort. While innovation in financial services infrastructure can facilitate high-value cross-border transactions to complete within a day or two, in today’s ecosystem of B2B trade, there is growing pressure for payments to complete in a matter of hours, not days.
That’s now the reality for the procurement efforts of hospitals around the world in search of personal protective equipment (PPE). With high transaction values and sellers across borders, these purchases would traditionally take several days to complete. But in a collaborative effort with Flywire, Citi Commercial Bank is working to accelerate these transactions for Boston-area hospitals that need equipment fast.
Speaking with Karen Webster, Citi Commercial Bank Senior Vice President and Treasury Sales Officer Thor Perplies described the experience of working with Flywire to facilitate the movement of funds from the U.S. to China within only a few hours in order to secure a PPE shipment for healthcare providers. While it’s a feat with unique requirements that arose from the special circumstances of today, Perplies discussed some of the lessons the experience has to offer the broader global payments ecosystem for a post-pandemic world.
Accelerating PPE Procurement
Today, The Boston Foundation is working with Harvard Business School student Sophie Bai, a native of China with personal ties to a China-based medical equipment distributor. She and a group of volunteers are working to facilitate the procurement of PPE from that distributor for Boston-area hospitals, and so far have secured 1.4 million pieces of PPE for Brigham and Women’s Hospital, Massachusetts General Hospital and others.
With the current PPE procurement climate a particularly hectic one, securing funds to make these purchases is essential, but moving those funds into China can be a complex and lengthy process. When a supplier needs to secure payment before releasing a shipment, moving money across borders quickly can be the difference between closing a deal and saving lives, or missing out on crucial equipment for healthcare providers.
“Given the market situation, the enormous demand and strain of [PPE] suppliers, it was absolutely necessary to have this transaction settle within a couple of hours,” said Perplies. “There was special oversight required for this particular transaction, versus a quote-unquote ‘normal’ transaction.”
As Perplies explained, while a million-dollar cross-border transaction would not necessarily require the direct involvement of the bank, the unique circumstances meant an extra level of collaboration to ensure funds were moved quickly and seamlessly. Citi and Flywire’s partners in China became a particularly important piece of this puzzle, allowing for “boots on the ground” with understanding of China’s clearing system and procedural requirements like unique payment file formatting to ensure the transaction occurred smoothly — and quickly.
By wielding Citi’s infrastructure to complete the transaction for The Boston Foundation and Bai, Flywire was able to ensure full compliance and quick transmission of SWIFT transaction data to the beneficiary bank in China. Since beginning the initiative, Citi and Flywire have facilitated about $2 million worth of transactions from the U.S. to multiple vendors in China to facilitate PPE procurement.
Paving Way For Faster B2B Payments
The ability to quickly, securely and efficiently move funds within a day from the U.S. to China is more essential than ever, particularly for healthcare providers procuring PPE and other necessary equipment to combat the coronavirus. With high transaction volumes, this speed is rarely accomplished, but through collaboration and technology, Citi and Flywire have demonstrated that it’s not only possible, but it could be the new normal of cross-border B2B payments.
Automation can accelerate the traditional process of “triangulating” transaction information between an invoice and supplementary information to facilitate a transaction or streamline workflows in cases in which financial institutions (FIs) must run credit checks to provide supply chain financing for a transaction to complete, Perplies said.
In all cross-border B2B payment scenarios, transparency is also critical to promoting efficiency. Providing clarity on all sides of a transaction into foreign exchange (FX) and other fees, and who is charging them, means no surprises if funds land in a beneficiary's account for an amount other than what was expected — an unwelcome surprise that can often lead to shipping and fulfillment delays.
In today’s market climate, maintaining cash flows through global supply chains is imperative to the health of global markets. But even in a post-pandemic world, cross-border payments should not come with friction that holds up trade, and according to Perplies, the collaboration with Flywire could ease the global financial services market toward a future in which cross-border transactions that settle within a few hours — not days — are the norm.
“Set up infrastructure to support real-time payments and reconciliation,” he said, pointing to the value of application programming interfaces (APIs) between partners like Citi and Flywire to facilitate instant sharing of transaction data before, during and after a payment occurs. “Preparing yourself through technology is really my recommendation.”