We recently held a webinar with treasury consultancy, Strategic Treasurer, which discussed some of the challenges and issues surrounding the payments process. Payments plays a central part of treasury’s role – 97% of attendees report that treasury is responsible for at least some level of payments, of which almost half are involved in payments both treasury and third party payments, as well as payroll. In fact, according to a survey we ran in conjunction with the UK’s Association of Corporate Treasurers earlier this year, payment processing is a core daily activity for 57% of treasury professionals.
Although payments are such an integral part of the treasury team’s role, this does not mean that it is without its challenges. In fact, 55% of those surveyed on the webinar said that a lack of automation is the number one challenge that they face in the payments process, and a further 17% said that the need to use multiple systems for executing payments was the key issue for them.
Given that close to three-quarters of survey respondents highlighted technology-related issues as the key challenges in the payments process, it’s unsurprising that the number one solution that could improve payments execution in their organization is through the creation of a payments hub. In fact, 40% of those surveyed said that a payments hub would have the most impact on payments processing in their organization.
So how exactly can a payment hub bring efficiencies and improve payments processing? Some of the key benefits include:
- Risk reduction: Standardization of payment policies is mandated by many internal audit teams (and recommended by external auditors) to reduce the success of spear phishing attempts and social engineering schemes.
- Central responsibility: Because payment hubs centralize payments prior to final transmission to the bank, the CFO can ensure that all payments – regardless of amount, location, currency – can be the responsibility of a single team.
- Global visibility: Automating all payments allows complete visibility of all outgoing cash flows so that the finance team can optimize cash balances and make effective decisions of where to deploy cash and liquidity.
- Cost savings: A payment hub reduces the number of systems which must connect to a bank. Time savings may also be incorporated into the ROI calculations where significant manual work is being automated.
The Business Case for a Payment Hub