Re-orchestrating Payment Processes at the Corporate Level for Treasurers

In the ever-evolving landscape of corporate finance, the role of treasurers is becoming increasingly complex and critical. As corporations expand globally and adopt emerging technologies, there is a pressing need to re-orchestrate payment processes to enhance efficiency, security, and compliance. This article delves into the strategies and best practices for re-orchestrating payment processes at the corporate level, with a specific focus on the pivotal role played by treasurers. In a riskier environment with increasing fraud cases, it is vital to secure further payment processes and enhance internal controls.

Understanding the Current State of Payment Processes

There are many challenges faced by treasurers. They are confronted to numerous issues and risks in managing corporate payment processes, as fraud increases (sometime) faster than technology.

We could summarize it:

·?????? Complexity of Payment Systems: Modern corporations often operate across multiple jurisdictions, each with its own set of regulations and financial infrastructures.

·?????? Security Concerns: With the rise of cyber threats and frauds, ensuring the security of payment processes has become paramount.

·?????? Compliance and Regulatory Requirements: Adhering to global and local regulations can be burdensome and requires constant vigilance.

·?????? New payment methods also offer opportunities to give competitive advantages to business operations.

·?????? Manual Processes: A significant portion of payment processing is still manual, leading to inefficiencies and higher risk of errors.

Current Practices

Currently, many corporations utilize a combination of in-house systems and third-party solutions to manage payments. These systems often lack integration, resulting in fragmented processes and data silos. Treasurers need to juggle multiple platforms, multiple formats and very local connectivity solutions (sometime), which can be time-consuming and prone to errors. Having a bank single gateway (BSG) solution or outsourcing it (e.g. FINOLOGEE, COBASE or COMO) may help in simplifying the connectivity, if treasurers want to avoid multiplication of connectivity solutions. There are CFOs convinced that Electronic Banking Solutions (EBS – domestic electronic systems offered by banks) are the panacea and the best possible solution. They ignore what exist and what could make their life more comfortable by mitigating risks. The problem comes from the lack of interest in treasury matters from CFOs in general.

Strategies for Re-orchestrating Payment Processes

1. Centralizing Payment Systems

Centralizing payment processes on a single, integrated platform can offer numerous benefits (i.e. Bank Single Gateway, such as LYNKS, TIS, COMO Digital Life, …) – see www.treasurymap.com for more details and the comprehensive list of players:

·?????? Streamlined Operations: Centralization reduces complexity and simplifies management.

·?????? Improved Data Visibility: A unified system provides a holistic view of all transactions, aiding in better decision making.

·?????? Enhanced Security: Centralized systems can implement robust security protocols, reducing the risk of fraud.

2. Adopting Automation

Automation can significantly improve the efficiency and accuracy of payment processes:

·?????? Reducing Manual Efforts: Automating routine tasks frees up treasurers to focus on strategic activities.

·?????? Minimizing Errors: Automated systems are less prone to errors compared to manual processes.

·?????? Accelerating Processes: Automation speeds up the processing of payments, improving cash flow management.

3. Leveraging Blockchain Technology

Blockchain technology offers a secure and transparent way to handle payments:

·?????? Enhanced Security: Blockchain's decentralized nature makes it highly resistant to fraud.

·?????? Increased Transparency: All transactions are recorded on a public ledger, providing full transparency.

·?????? Cost Reduction: Blockchain can reduce the need for intermediaries, lowering transaction costs.

NB: despite the potential of DLT technologies, there are existing robust players, in SaaS mode or fully outsourced.

4. Implementing Real-Time Payment Solutions

Real-time payment (RTP) systems enable instant fund transfers and offer several advantages:

·?????? Improved Cash Flow: RTP systems provide immediate access to funds, enhancing liquidity management. Instant payments, for example, will offer new potential for collecting faster cash.

·?????? Customer Satisfaction: Instant payments can improve customer satisfaction and vendor relationships. By using more payment methods, a treasury department generates value for operations.

·?????? Better Financial Planning: Real-time insights into payment status help in better financial planning and forecasting.

5. Ensuring Regulatory Compliance

Staying compliant with EU regulations is crucial for corporations (e.g. PSD2 under review, Instant Payment, Late Payment Dir, AML, etc..):

·?????? Regular Audits: Conducting regular audits ensures adherence to regulatory requirements.

·?????? Staying Updated: Keeping abreast of changes in regulations helps in timely compliance.

·?????? Implementing Compliance Tools: Utilizing compliance management tools can simplify the process of adhering to regulations.

6. Enhancing Cybersecurity Measures

Protecting payment systems from cyber threats is critical, in a riskier context with more fraud cases and attempts:

·?????? Multi-Factor Authentication: Implementing multi-factor authentication adds an extra layer of security.

·?????? Regular Security Training: Conducting regular security training for employees helps in mitigating risks.

·?????? Using Advanced Security Solutions: Leveraging advanced security solutions like AI and machine learning can detect and prevent cyber threats.

Benefits of Re-orchestrating Payment Processes

Re-orchestrating payment processes can yield several benefits for the “real economy” (but also for NGOs, Private Equity Funds, Fund Servicers, Family Offices and SMEs):

1. Increased Efficiency

Streamlined and automated payment processes lead to significant efficiency gains, allowing treasurers to focus on strategic initiatives.

2. Enhanced Security

Implementing advanced security measures reduces the risk of fraud and cyber-attacks, ensuring the safety of corporate funds.

3. Better Compliance

A centralized and automated system simplifies compliance management, reducing the risk of regulatory breaches.

4. Cost Savings

Automation and efficient processes can lead to substantial cost savings, as manual efforts are minimized, and transaction costs are reduced.

5. Improved Cash Flow and Liquidity Management

Real-time payment systems and better visibility into transactions enable treasurers to manage cash flow more effectively, ensuring liquidity. We must never forget that liquidity is the most important element in finance. Accounting losses may be repeated while lack of liquidity once may kill.

Securing payment processes is a “must”, not anymore a “plus”

Re-orchestrating payment processes at the corporate level is an essential step for treasurers to navigate the complexities of modern corporate finance. Treasurers need future-proof solutions to face increasing risks of frauds (i.e. internal and/or external frauds). By centralizing systems, adopting automation, leveraging blockchain, implementing real-time payment solutions, ensuring regulatory compliance, and enhancing cybersecurity, corporations can achieve greater efficiency, security, and cost savings. As the financial landscape continues to evolve, staying ahead of these changes is crucial for maintaining a competitive edge and achieving long-term success.

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Fran?ois Masquelier, CEO of Simply Treasury – Luxembourg