By Sven Hinrichsen

Working with multiple systems, the growing threat of fraud, and lack of data visibility are the top three challenges treasury professionals face with corporate payments. That’s according to the Strategic Treasurer 2022 Global Payments Survey of more than 230 treasury and payments professionals.

These challenges are not surprising. The pandemic has accelerated the push for digitalisation. However, adding more electronic payment types and digital systems creates more workflows and different data sources for an already complex operation. At the same time, the increase in ACH payments has unleashed a new wave of sophisticated corporate email compromise schemes. With so many people having changed jobs since the pandemic, these challenges are now even more acute.

Perhaps surprisingly, these concerns have risen to the level of “top challenge” for companies far more frequently than concerns such as maximizing card refunds and vendor discounts and using different payment types to optimize capital. circulating.

These are still important, but not nearly as important as making sure your day-to-day payment-handling process runs smoothly. These study findings square with the key challenges we see working with treasury and payments professionals.

Challenge 1: Using multiple systems

The main challenge, cited by 58% of respondents, is that they are working with multiple systems. This is difficult when systems aren’t fully integrated, and only 5% of respondents said their ERP system was fully integrated with their banking platforms. Nearly 90% said there was some integration, while 21% said their ERP system is not connected to their banking platforms at all.

What we see is that having systems that are not fully integrated means that teams find themselves running overlapping processes. They are switching between systems and exporting data from one system to a spreadsheet and manually uploading it to a different system.

At the same time, they handle a different workflow for each payment type or schedule. Over 80% of respondents make payments with more than one bank. Over 75% use bank portals for payment connectivity and 48% cite banks’ complex formatting requirements as a challenge.

Challenge 2. Security and fraud management

Preventing fraud is more of a challenge for smaller companies, with 55% citing it as a top concern compared to 36% of those of large companies. What we’re seeing is that smaller companies are experiencing more of these email-based attacks, likely because their systems and processes simply can’t keep up with the pace of innovation from scammers. The fear of an attack is greater because the impact on a smaller business is so much greater.

A larger company with a large balance sheet can withstand a fraudulent attack more easily, but it can put more strain on a smaller company. At Corpay, we have processes in place to help our customers recover from fraudulent payments. Many small businesses can’t afford to lose access to their money for that long.

Challenge 3: Access to accurate data in real time

Gaining real-time visibility into payment data appears to have become increasingly important, with 43% of respondents saying it is a major challenge. This is perhaps a sign of changing expectations in a world that is becoming increasingly digitised. It wasn’t long ago that most vendor payments were made by paper check. In that world, real-time visibility was just a pipe dream.

As the rest of the organization goes digital and decision-making becomes more data-driven, there is an increased demand to provide more timely financial data.

But the challenge isn’t limited to the slower ratios. Reconciliation takes longer, which means labor costs take longer. In industries such as construction, where costs are passed on to the customer, this means billing is delayed. This, in turn, creates challenges with cash management.

What is interesting is the extent to which the three main challenges are related. It is difficult to provide timely and accurate data when working with multiple systems and there is no standardization. The level of complexity people are dealing with creates constant time pressure, giving scammers an opening to sneak in. Additionally, delayed data can prevent day-to-day reconciliation, which is one of the best practices for detecting and recovering from fraudulent transactions.

The linking of these challenges suggests that the same solution can eliminate many. Companies seem to be moving in that direction. The main areas of investment are AP automation, which could include invoice and/or payment automation, and payment services.

Payment automation allows customers to combine different payment processes and bank connections into one workflow. AP only needs to transmit a file to the payment service provider and receives the standardized remittance data. Using the API, file transmission can be initiated from the ERP system and the remittance data is entered back there.

Outsourced payment services are a more robust solution, encompassing automation, vendor enablement, and data management within a B2B payment network. Payment service providers also handle time-consuming back-end issues, such as error resolution and expropriation. What we typically see with clients going the outsourcing route is a 75-80% reduction in time spent processing payments.

There is talk in the profession about transforming accounts payable from a cost center to a profit center through increased credit card discounts. The promise of big discounts on the shopping you’re already doing is tempting. But if your processes are still largely manual and you need to hire extra staff to run the process, this can easily negate the gain. And it doesn’t position your organization on scale.

The responses to this survey make it clear that the first order of business is to ensure that the process is actually running in a scalable and reliable manner with the required protection and visibility. Solutions that approach supplier payments holistically while streamlining complex processes, reducing the risk of fraud, and giving you visibility into the status of all your payments. This, in turn, greatly improves your ability to manage working capital, capture rebates, and make more credit card payments, thereby increasing rebates and helping you meet your cost reduction goals.

Leave a Reply

Your email address will not be published. Required fields are marked *