The payments space is in the midst of an evolutionary shift. Technological disruption, the growing challenges posed by new market entrants and a seemingly never-ending stream of divergent regulatory updates have created new hurdles and sources of friction for large organisations – which is why firms can no longer afford to be weighed down by payments systems and processes that are too complex or overly manual.
According to one 2018 study conducted by Davies Hickman, B2B payments have become particularly complicated over recent years. More than half of 100 large organisations surveyed told researchers they have more than 500 supplies, and 44% said they received more than 2,000 invoices each month for processing.
Meanwhile, three in five financial decision makers said that up to 20% of the invoices they received were from overseas – and 91% were still regularly attempting to use legacy clearing systems to settle those invoices, often in tandem with a mishmash of methods including SWIFT, cheques and various alternative systems.
Yet by utilising legacy systems and relying upon a hodgepodge collection of contrasting eBanking systems, large organisations are subsequently exposing themselves to heightened operational risk, increased failure rates and unnecessary costs. That’s why more and more financial decision makers are looking to invest in tools which enable their organisations to streamline payments – and in doing so, their respective firms can expect to reap several major benefits.
First and foremost, substantial cost reduction is one of the key reasons an organisation should look to streamline their payments infrastructure.
Over a third of organisations reckon as much as 40% of their invoices require follow-up because of disputes – and for 16% of companies, that means deploying the time and expertise of more than 36 people. Meanwhile, almost half of all large organisations surveyed by Davies Hickman admitted to making payment mistakes on occasion, misdirecting an average £3m in payments per year.
By investing in streamlined payments solution capable of integrating with existing TMS or ERP infrastructure, much of that human error and duplication of processes can be eliminated, while many follow-ups and disputes processes can be automated.
Because most traditional payments systems aren’t appropriately equipped to process emerging payments methods, crucial bolt-on additions often create a corporate payments infrastructure that is disjointed and subsequently heavily exposed to security risks. Likewise, a rise in cross-border payments means large organisations are increasingly finding their teams responsible for holding unfamiliar data within those incompatible systems.
ACI Worldwide’s 2018 Global Payments Survey found merchants are particularly self-aware around this issue in terms of exposure – with one in five surveyed admitting they’d experienced theft of payment data within the last 12 months. Meanwhile, according to the 2018 AFP Payments Fraud Survey, a record 78% of all organisations reported being hit by payments fraud in 2017.
Just as a centralised payments solution is able to reduce costs by automating cumbersome processes, it also enables organisations to benefit from a structured design with heightened security protocols to protect against fraud and infiltration, automate onboarding and use built-in regulatory compliance modules.
Finally, by streamlining payments an organisation can expect to gain drastically enhanced cash visibility – empowering financial decision makers to access real-time transaction data from multiple accounts via one central platform. Not only are these platforms compatible and easy to integrate with existing TMS or ERP systems, but they can also take on all payments types. In turn, this enables firms to benefit from automated data agglomeration, segmentation and bespoke reports, speeding up the ability of teams to react to change, access revenues and make better-informed decisions.
It’s worth pointing out that before jumping on board and investing in a centralised payments solution, financial decision makers must first sit down with their teams to assess their organisation’s exact requirements and explore case studies from similar organisations. Teams will need to take into consideration factors such as the number of monthly payments they need to make, costs associated with payments solutions and how a centralised solution would impact upon existing systems and customer service.
For those keen on learning from the experiences of another organisation that took the plunge in centralising its payment processes, tune in to our next webinar on Thursday 28 February at 9:30am GMT – where we’ll be joined by Pablo Velez, EMEA Treasury Manager at Archroma, and Dr. Daniela Maruhn, Head of Customer Success at TIS, to explore in-depth the logistics and benefits of streamlining payments.
Register today and get valuable insights.