by Andrew Owens, SVP of Payments & Managed Bank Connectivity, SunGard’s AvantGard
Working capital optimisation has become a key priority for corporations of all sizes, with senior executives increasingly focusing on credit, collections and alternative financing techniques. In addition to these initiatives, centralising and streamlining payments can make a vital contribution to working capital performance, as well as reducing costs, increasing visibility and control over cash, and improving internal and external compliance.
The risks of payment inefficiency
According to a recent research report published by SunGard , only 20% of respondent companies have implemented consistent payment workflows across all of their entities, despite growing opportunities to do so, such as the gradual shift towards electronic payments in the United States and standardised payment instruments in Europe. The format on which euro payments are now based, ISO 20022, is rapidly becoming established as a global standard, making it easier than ever before to achieve a consistent approach to payments.
A decentralised, fragmented approach to payments brings a variety of challenges. For example, payments technology is typically acquired and implemented in each business function that is responsible for payments, precluding economies of scale and resulting in lower levels of automation and control than a single payments platform would allow. Each of these systems needs to be connected individually to the relevant bank(s), replicating resource requirements both to manage interfaces and support local formats. In many cases, there may be no connection between internal payment systems and banks’ electronic banking systems, resulting in manual, error-prone processes and high potential for fraud.