Cash & Liquidity Management

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What Will it Take for Corporates to Prepare Their Global Payments Processes for the Future? Corporations are missing out on leveraging transformative technology, such as a payment factory or bank integration solution due to a lack on incentive around modernising their treasury operations.

What Will it Take for Corporates to Prepare Their Global Payments Processes for the Future?

What Will it Take for Corporates to Prepare Their Global Payments Processes for the Future?

By Luc Belpaire, Director of Product – Payments, FIS


For the sixth year running, FIS has surveyed corporate treasury and finance professionals globally – and once again, many departments are battling the same challenges as they faced in 2014. So, what will finally prompt them to modernise their operations for the future?


Of the corporations surveyed, 84% have already centralised their payments. However, most companies are still working in extremely complex payments and bank connectivity environments. Almost half (48%) are managing more than 100 bank accounts and 19% work with at least 11 banks. This explains why so many corporations are still dealing with fraud risk, high costs, little control and a lack of visibility into cash.

Notably, not many have taken the next step towards making their payments future-ready by implementing a payment factory solution. According to the report, only 10% rely on a payment factory to originate and deliver payments to banks.


What opportunities are corporations missing?

Corporations are missing out on leveraging transformative technology, such as a payment factory or bank integration solution that can help them centralise and standardise their payments processes.

Of the respondents, the 79% which have implemented a payment factory have achieved payback within or under two years, and 67% achieved a return on investment (ROI) of more than $100,000, with 15% achieving an ROI of more than $1m.

A payment factory performs these functions:

  • Consolidates data feeds from multiple payment systems such as accounts payable (AP) or enterprise resource planning (ERP) into a single view of payments
  • Automates and assigns workflows for the payments processes across the entire organisation, from AP to HR to treasury
  • Puts controls in place so payments don’t leave the organisation due to human errors or fraud
  • Converts payment messages into formats that the banks require
  • Connects to global banking networks such as SWIFT to help streamline connections to the multiple banks with which a corporation deals 
  • Takes advantage of the latest trends around real-time payments and other services that banking application programming interfaces (APIs) and SWIFT gpi have to offer 
  • Acts as an in-house bank, helping reduce banking fees

Look for these eight returns on investment (ROIs) when building a business case for a payment factory:

1. Improved control and compliance
A payment factory centralises and standardises payment processes. The entire payment chain is secure through data and role segregation, audit history and flexible signing rules. That means human errors and fraud can be avoided, tangibly improving security and compliance.

2. Simplified integrations and workflows
A payment factory enables the establishment of an in-house bank for subsidiaries. By executing all business-unit payments, the in-house bank gives enterprise-wide visibility and control. It can also act as the interface between a company and the financial markets.

3. Reduced payment fraud
By enhancing workflows with internal and external screening, a payment factory helps a business utilise blacklists, whitelists and fraud listings and achieve compliance across territories. Meanwhile, dashboards provide real-time insights into transaction status and exceptions.

4. Greater visibility and insights
Centralised accounts and cash flows give better visibility of cash, while intuitive interfaces make payments visible to cash positioning. Validation of bank statements offers control over payment flows. And intraday reporting enables a business to update cash positions regularly and spot unexpected incoming funding.

5. Centralisation and automation
A payment factory standardises processes with best-practice workflows across regions, entities, banks and payment types, increasing productivity and economies of scale. Inefficiencies can also be eliminated through automation because there is no need for multiple approvals in multiple systems. Finally, rationalising infrastructure can tangibly simplify IT and save administrative costs.

6. Increased productivity
As a company moves from multiple eBanking systems to a single hub, usability and user management are both improved. The time and cost of documentation and employee training can also be avoided. And by integrating enterprise resource management (ERP) and treasury systems, company growth can be supported while maintaining headcount.

7. Lowered costs
Bank-agnostic connectivity such as SWIFT reduces bank dependence and improves a company’s negotiating position. That can mean lower transaction fees and a higher funding credit line. What’s more, increased straight-through processing helps reduce bank repair fees for manual errors or missing data.

8. Flexibility and real-time readiness
Finally, a payment factory offers the agility to fine-tune processes and respond to new market requirements – such as real-time payments – without changing back-end systems. Similarly, changes can be implemented once without having to individually address back-office systems such as ERPs.

 

 

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