How to Speed Cash Flow and Streamline Treasury Operations in a Shaky Global Economy
With turbulent financial markets and credit remaining tight around the world, companies of every size and shape are scrambling to lower their administrative and project costs, wring more productivity out of existing operations, and maintain or grow revenues by delivering immediate, tangible benefits to their customers and trading partners.
To trim expenses, many are shedding staff and freezing budgets. Others are agreeing to buyouts or mergers to stave off competition or simply survive. Still more are adopting entirely different strategies and advanced technologies to help bolster their bottom line.
One approach some companies are using to improve their cash flow is accelerating payment processing and simplifying financial transaction management through automation. Instead of stringing together a variety of financial software and reporting tools, more treasurers and cash managers are looking to treasury workstations to improve their accounts payable (A/P) and accounts receivable (A/R) processes, speed up collections, exercise greater control over their disbursements, decrease payment processing time and costs, and reduce errors and fraud risk.
Treasury workstations are computer systems that run specialised financial management software to help companies automate manually intensive, repetitive steps to more effectively manage their cash flow and streamline internal treasury operations – from A/P and A/R to cash management and reconciliation. These workstations also enable organisations to communicate seamlessly over the Internet with cash management banks, other financial institutions and customers or suppliers. The result is faster availability of funds, more reliable financial reporting and forecasting, centralised access to financial data, and more efficient handling of a company’s routine treasury functions.
Treasury workstations can either be a server-based, in-house system that runs software on a company’s own computers or they can be part of an outsourced service delivered over the Internet.
In-house, served-based solutions can incur steep ramp-up costs, such as initial software licensing fees, expenses for adding and installing computer servers plus vendor and internal IT resources for implementation and testing. Software license maintenance fees and continuing IT support also contribute to system lifecycle cost for the duration of the installation.
In addition, server-based workstations require companies to safeguard their own financial databases and customer records against hackers, as well as conform to rigorous Payment Card Industry Data Security Standards (PCI-DSS).
These standards, which have been adopted worldwide by the major credit card brands, require merchants who process, retain or transmit payment card data to encrypt that data wherever it is stored. PCI-DSS standards are considered the foremost benchmark for cardholder account security and certify that a vendor’s products and technologies meet the most stringent industry criteria for processing and storing confidential payment data. The PCI Security Standards Council also recently adopted a Payment Application Data Security Standard (PA-DSS) to ensure that payment applications marketed by software vendors support PCI standards as well.
With an outsourced, Internet-based workstation, a company’s financial information is centralised at a secure data centre of a third-party software-as-a-service (SaaS) provider, then distributed on demand to authorised treasury department computers via secure web connection. Software applications like these, which are hosted on the Internet and accessed using a web browser, are known as cloud computing.
In cloud-based environments, day-to-day responsibility for protecting a company’s stored financial data and meeting PCI requirements rests with the service provider, although the client company remains ultimately accountable for adhering to PCI requirements.
Historically, integrating a company’s financial management processes with a bank’s treasury management services was something only the very largest organisations could take on due to time, expense and complexity. With today’s advanced technologies, however, many smaller companies are finding Internet-based payment processing and data storage solutions more cost-effective, easier to implement and more secure than server-based systems because they require fewer treasury and IT resources, have shorter integration times so companies achieve transactional and operational efficiencies faster, and have multiple levels of encryption and other security controls in place to ensure confidential data is protected.
There is now a greater demand for online virtual point-of-sale solutions, which give business-to-business (B2B) and business-to-government (B2G) merchants a highly secure, easy and affordable means for processing credit cards, purchasing cards and other electronic payment transactions with minimal investment and no development uptime. Just as with other cloud computing tools, all that’s required for deployment is a web browser and Internet connection.
Whether server-based or cloud-based, all providers of treasury workstations and payment processing systems should be held to the highest standards for data security and internal controls.
While no treasury workstation or payment system on earth is 100% hack-proof, companies can and should manage the risk of a potential data breach by solving for the concept of ‘graceful failure’. By assuming your system will fail at some point and that perpetrators will gain access to your most sensitive information, regardless of the security countermeasures in place, treasurers and cash managers should plan to either build and protect their own data fortress at the outset or hire a trusted service provider to do it for them.
Any business that takes credit cards also needs to ask themselves whether they’re storing and safeguarding confidential, personally identifiable customer data in the best possible way – how much data should be retained, where it makes the most sense to store that data, and how best to protect it. Companies that try to secure card data themselves often find it’s very difficult to ensure proper safeguards, yet the responsibility for protecting customer cardholder data grows exponentially the larger a business becomes. Consider these sobering statistics:
These reports serve as powerful reminders of the importance of safeguarding financial data and how difficult it can be for companies to ensure proper safeguards when they do it themselves.
When choosing a treasury or payment processing workstation, make sure your service provider can answer best practice questions like these:
One of the safest alternatives is eliminating storage of credit card data from a merchant altogether. If companies don’t keep credit card information themselves, there’s nothing for hackers to steal. A credit card and customer identification storage service relieves merchants of the burden of worrying about whether their confidential and sensitive customer data could be compromised or released in the event of a security breach.