Treasury teams around the globe have a daunting list of responsibilities, which include reducing risk, effectively managing liquidity, forecasting and meeting regulatory demands – tasks that are especially complicated for businesses that have grown through acquisition and continue to expand internationally, as most have.
With hundreds of bank accounts spread across multiple banks in different jurisdictions; however, most treasury departments are unable to effectively meet rising demands. Because of the manual effort involved in most processes, they’re unable to achieve clear and timely visibility of all bank accounts or even access and move surplus balances.
The result is payment processes strewn with error, multi-bank arrangements ending in an array of bank connectivity products and a lack of accurate, timely reporting, which all leads to inefficiencies in the business.
Business is challenging enough, there’s simply no need to endure additional unnecessary complications. For broader, more accurate visibility, organisations can adopt best practice methodology and take an integrated approach to technology that will help them meet their business needs.
To start, here are tips for overcoming the top four payment challenges that treasurers face:
- Disparate processes and excessive manual effort
The drive to improve internal processing controls and financial reporting across the enterprise is a continual one. Unfortunately, lax control measures and manual intervention creep in over time. The absence of efficient, rules-based technology and effective reporting has created an over-reliance on manual intervention in many parts of a treasurer’s operation.
Implement a platform, such as a payment factory, that can standardise procedures and automate internal controls such as workflow and segregation of duties, limits and auditability. It should offer comprehensive, accurate reporting and strengthen visibility into all multi-banking, payments and treasury activities.
- Cross-border payments
Understandably, many organisations see little alternative to using cross-border payments to settle their obligations in other countries. These might relate to supplier payments, payroll and other local debts. In countries where there are significant concentrations of payments this is not cost effective and runs the risk of payments going astray or being delayed.
Instead of making large volumes of cross-border payments, consider opening bank accounts in countries where you have subsidiaries or a high concentration of payments, and then funding these accounts with low volume, high value cross-border payments from the head office. The in-country disbursement bank accounts can then be managed centrally to initiate large volumes of local automated clearing house (ACH) payments. This will save both time and money, without losing visibility or control, and enable you to manage local liquidity more efficiently.
- Poor visibility resulting in a questionable cash position
To start, Treasury teams generally don’t have access to all the bank account information they need to do their jobs effectively. To make matters worse, payments and cash positions are often tracked separately. Banks also have a differing range of service levels that they can provide to customers. Manually consolidating data from multiple sources into spreadsheets leads to errors and inconsistencies, forcing decisions to be made based on outdated information.
Implement a solution such as a payment factory that provides real-time global access to transactional payment information and account balances across all enterprise applications, payment types and banks. Make sure it can combine data transformation with reconciliation, giving you a more accurate and clearer picture of cash flowing in and out of the organisation.
- Staying on top of KYC, AML and fraud prevention
Through requirements such as know-your-customer (KYC) and anti- money laundering (AML), pressure has increased significantly to prevent both internal and external fraud and financial crime. Staying ahead of countless regulations, blacklists, process controls, duplicate payments and potential fraudulent behaviour by employees can be onerous and distracting … or even worse, overlooked, which can be devastating to the business.
To manage reputational risk more effectively and gain peace of mind, best practice is to implement technology to automate workflows, introduce effective checks and controls, screen payments, and monitor user behaviour. Know who you are paying – and when – and have the ability to validate that the payments are going to an active, correct and safe bank account. With early warning signs and transactions alerts, suspicious activity can be quickly detected and prevented.
As the strategic role of treasury continues to grow, a reliance on manual controls will simply not be feasible. Technologies, such as payment factories, exist and can provide struggling treasury departments with all the resources they need to be effective – it’s just a matter of taking the steps to implement it. Doing so will require a little thought and work upfront, but its effort that will be well-worth it in the long run.
Download your copy of the Bottomline Technologies whitepaper “5 Best Practices for Improving Payments and Cash Management” now.
Tim de Knegt, treasurer for the Port of Rotterdam, discusses how he is looking to bring more value to the Port's clients using blockchain.
Regulation technology is fast gaining currency by transforming how financial institutions can tackle compliance in a swift, comprehensive and less expensive manner.
Many banks around the world, large and small, continue to experience major security failures. Biometric systems such as pay-by-selfie, iris scanners and vein pattern authentication can help.
The implementation date of Europe's revised Markets in Financial Instruments Directive, aka MiFID II, is fast approaching. Yet evidence suggests that awareness about the impact of Brexit on MiFID II is, at best, only patchy and there are some alarming misconceptions.