How Digitisation is Improving Corporate Payments

In recent years, the corporate payments management sector has suffered from underinvestment in many organisations, in both process rationalisation and technology infrastructure. This has led directly to a range of operational challenges, including inefficiencies, increasing control, security and compliance risks, high error rates and the proliferation of disjointed solutions which require an expensive patchwork of manual support processes. There are many ways in which strategic digitisation can materially improve the situation for the corporate enterprise – and should be actively evaluated.

Digitisation provides the technology infrastructure to centralise and standardise the payments process, and to eliminate many of the problems summarised above. Digitisation requires robust, proven technology which enables optimised processes to be deployed to address the most critical challenges, and to achieve best practice in this vital business function. It enables payments to be managed with little or no human intervention, through customised straight-through workflows (STP), which increasingly build the base for powerful robotics to achieve fully dependable and transparent end-to-end results.

The key features of a strong solution bring benefits to all aspects of payments management, starting with integration from the start of the procurement process, through payment execution, and on to account reconciliation. Each corporate solution is configured to fulfill specific authorisation and workflow control requirements, so that different levels of policy, centralisation and functionality are properly accommodated.

Contemporary solutions standardise the management of diverse global banking structures and systems, handle an array of different file and message formats, connectivity channels, communications protocols and security systems, and deal with the complexities of multiple ERP systems and instances. The key is the flexibility of configuration and set-up, and the robustness of the testing and commissioning process. The result is an operational payments solution which provides a very high level of automation, and which may be fully relied upon to produce consistent, accurate and audit-proof results.

Best practice digitised payments processes deliver enhanced security and control, with a high degree of integration. Centralised processes and information storage enable the visibility of real time financial risk information, substantially improving the quality and utility of operational and management reporting. Payment processes may be managed holistically and efficiently across departmental, geographic and temporal boundaries. Payment message and file validation, authorisation, format enrichment and optimisation, exception handling, error repair, payment release control and timing, and the automated reconciliation quote are substantially improved through incorporation into digitised workflows. The underlying automation and standardisation in turn increase audit quality, team training, and management’s ability to oversee the process.

Cyber security and fraud detection and prevention are growing concerns for corporate finance teams and treasuries globally, with sophisticated threats from diverse sources including hackers, organised crime, terrorists and disloyal employees. Modern digitised payment solutions provide a range of protections, including access control, system permissions, segregation of duties, violation alerts, audit tracking and encryption processes. Centralised solutions offer the best environment for staying up to date with the latest advances in protection mechanisms across the organisation.

eBAM (electronic bank account management) enables bank account management to be centrally digitised, allowing account access, signatories, operations and mandates to be administered effectively and synchronously, providing a secure compliance tool for a consistent administration of bank accounts and mandates, way beyond the capabilities of any manual solution.

In addition, digitisation provides the means to stay current with the increasingly complex and costly demands of regulatory compliance. With a central approach including single ‘source of truth’ repositories, painful topics like sanction screening or internal blacklists can be handled in a more automated and secured way.

Blockchain – potentially – might provide a quantum leap for financial process management, by enabling counterparties to be unambiguously identified and validated, and payments and other transactions to be proved, secured and executed without the possibility of being revoked. Open blockchains could provide the route to highly streamlined and efficient cross-border payments, if they become ready for mass transaction volumes; they are presently subject to uncertainty in the areas of transparency, performance and regulation. Private blockchains are, effectively, encrypted, centrally controlled databases; their use of a middleman arguably eliminates one of the central blockchain benefits. It is not yet clear whether blockchain is going to fulfil the promises and hype of its emergence. Hanse Orga is presently researching and evaluating Blockchain technology, in order to be ready if its undoubted value to the corporate payments sector becomes more visible.

This article has set out the high-level case for corporates to standardise and digitise payments management. The potential to achieve best practice process, security and compliance gains in a neglected but critical area of finance is self-evident, and today’s solutions can be configured and scaled to meet a broad range of different corporate sizes, organisations, business requirements and budgets.