International (Global) Strategies | Articles
Are cash distributions the solution to difficult payouts?
In theory, distributing funds to recipients should be simple.
Whether for class action lawsuits, pension disbursements, immigration processing or more, actually distributing funds to recipients can be unexpectedly difficult. In theory, it should be simple: a firm can send a check or electronic payment to plaintiffs, vendors, or foreign workers either one time or regularly. However, this process does not address some unfortunate realities: those without bank accounts, a permanent address or even those that live in remote regions.
The shocking number of people without a bank account
While it may seem like a small minority, a large number of adults around the world are without a bank account or considered underbanked. This is typically due to a lack of steady funds, a distrust of banks or the inability to easily reach a branch location.
Which clients require unique payments?
Regardless of the reason, nearly every firm faces this payment distribution challenge at some point. This is made more difficult when there is a deadline for payment. Here are just a few instances where this issue becomes apparent:
- Payouts to those living in a remote area
- Fees for overseas recipients without a permanent address
- Payment for recipients without a bank account
Case study: One firm’s solution
Recently, a Washington, DC-area firm required a unique solution to distribute local currency to recipients throughout the Middle East. In this particular case, the funds required distribution resulting from a class action lawsuit. The problem? None could receive the payment through traditional means such as a wire, check or other and the firm was required to facilitate monthly payouts. The firm worked with Western Union Business Solutions to utilize agent locations, meaning that recipients could easily pickup cash from one of 500,000 locations by taking advantage of WU® GlobalPay for Law Firms. The firm was able to quickly schedule the payment online and complete a foreign exchange. Recipients were able to collect local funds within a few hours in some cases.
A growing problem?
It is not just overseas recipients that may require cash. The economic turmoil spurred on by COVID-19 had a dual effect on firms and their payees: people are having a harder time accessing traditional financial services across the globe, while firms are placing more focus on cash flow and a reduction of overhead. In some cases, firms simply cannot afford to waste time and money with figuring out complex payment scenarios.
Additionally, many sectors requiring this type of payment are likely to grow: class action law suits could spike due to COVID-19 and the new Biden presidency could mean more requests for immigration and asylum services. For firms looking to streamline the payout portions of this work, the simplest solution may be best: use cash.
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