gtnews: Why would a corporate benefit from using a batch upload product? Can you provide a breakdown of the cost savings?
There are several ways using a batch upload module would benefit a corporate. For starters, in the old environment, the accounts payable team would have to extract the payment data manually from their enterprise resource processing (ERP) or accounting system and then enter each payment separately into their banking or other online payment platform. This obviously takes time as not only do the payments get keyed individually; they also have to get approved individually. If a team were to have a run of 100 payments it would take 200 individual steps to complete the payment process. By using a batch product, the data can be exported directly from the company’s ERP system into a comma-separated value (CSV) file and the whole file can be uploaded and approved within a few minutes. A large benefit is that the file can have multiple payments as demonstrated in the example above. A secondary benefit that should be expected of batch upload products is that they allow for multiple settlement currencies within the same file. For example, a UK company can upload payments in euros and US dollars in the same batch file to it financial provider.
As for cost savings, there are several. Firstly, there is a huge reduction in the time it will now take the accounts payable team to process their daily/weekly overseas payment run, making the department more efficient. The other cost saving is by amalgamating all the payments into one batch, the volume of FX will now be higher, hence the exchange rate will be more favourable than if the company were to process individual payments. Lastly, having all the specific payments benefit from the same exchange rate will make the account and payment reconciliation process more efficient.
gtnews: Many corporates are used to making individual payments and might not see a need to change things up. Why should they shed their old ways and take up batch processing?
The simple advantages are time, cost savings, reporting and just being able to deliver a process in a better and more efficient manner. Why would a corporate not want to amalgamate all their payments to their overseas suppliers in one file, rather than spend hours keying individual payments?
The error rate alone is far higher when manually keying deals and can result in payment errors, which in turn can delay the payment reaching the final beneficiary, resulting in a customer service issue for the corporate. Of equal importance, if the file consists of 200 payments, then the accounts payable team has to complete more than 400 separate tasks rather than just five or six when using a batch process module. It’s a win-win situation for the corporate because not only are they freeing up valuable time for their accounts payable team, they are also amalgamating all of their payments into one file which leads to less errors.
The other major advantage of doing your payment via a batch process is the reporting it delivers to the business. No longer does the accounts department get 200 separate confirmations, they can now get one report detailing all the payments executed within the batch. The resulting confirmations can then be uploaded back into a corporate’s ERP system. To me, it is a no brainer for a corporate who is currently processing daily/weekly payment runs to their overseas suppliers to move from their current process to a batch process.
gtnews: Would a corporate be able to receive a quote for multiple currencies with a single click?
The simple answer to that question is ‘yes.’ A more detailed answer would be that one should check with their provider to verify that that capability exists. A corporate can upload a file for payments that they need to send to the beneficiaries in US dollars (USD), euros (EUR), Swiss francs (CHF), Danish krone (DKK) and Swedish krona (SEK). The corporate would upload this file and be able to get a quote for all of these currencies in one view and accept the prices with one click. It would also allow them to have different settlement currencies in the same batch, so it means the USD and the EUR deals can be priced against sterling, whereas all the other currencies in the batch could be priced against the USD. So not only can corporates purchase multiple currencies within one file, they can settle in multiple currencies.
gtnews: What are the risks associated with batch processing? How can corporates mitigate them?
The risks are the same as those associated with using any online payment portal: internal security and rate volatility. So how does batch processing help businesses mitigate these risks?
From a security standpoint, corporates should have segregation of duties. They need to have somebody upload and process the batch, but that same person should not be able to approve the batch. Once User 1 has uploaded the file and agreed on the exchange rates, the batch is then waiting to be approved. An email is then automatically sent to User 2, who would have to separately log in to the batch processing platform using their unique username and password and approve the file. This segregation of duties mitigates the security risks.
The second way batch modules help mitigate is reducing the risk associated when keying payments during a volatile market. If a business is currently keying individual payments rather than using a batch process and the market is falling against the currencies they are looking to purchase, then by the time all the payments have been keyed and approved – which could take several hours depending on the number of payments – then think about the cost implication due to the exchange rate movement and how much money the business could potentially lose if the market continued to fall within that hour. Some of these files could total £1m or more, so if the market was to move against the business by 1%, which is not unusual, then the business would end up paying £10k+ more for their payments. By using a batch process module, you can execute 100 payments in just a few minutes, thereby eliminating the risks associated with a falling FX market.
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