14/01/2016 - Torben Siert, International Account Manager, Hanse Orga

Monitoring payments from a central hub – how it’s done

For the past two years there has been a clear trend for companies to look for a more centralized way of handling both treasury and vendor payments. This trend had and still has different drivers. First, there was the introduction of SEPA which has changed the payments landscape and forced European companies to adapt.

We also see, however, an increased need for control, visibility and compliance (SOX). Finally, the increased deployment of shared service centers as well as the increasing scope of activities carried out by shared service centers (SSC) has put additional pressure on corporations to develop a global and unified view on their payment process. The central question is: how can you realize a global payment solution across the group?

First of all, we have to highlight that such a central payment hub can be set up independently from a SSC environment. Companies that have a shared service center including centralized accounts payable function in place may be a few steps ahead, but that should not deter others from setting up a payment hub. Whether or not you have a shared service center, you all still face the same challenges: multiple banking partners, different online banking tools - which go hand-in-hand with just as many passwords and tokens, heterogeneous approval processes, a manual effort for uploading payments and approving them, the usual hassle when handling manual payments, and so on.

So, how can you rise from such a diverse situation that is characterized by limited control and visibility to a more secure way of making your payments? How can you get to a situation where authorization procedures are standardized and well understood within the entire organization, where straight-through processing is achieved and where relying on a great range of different e-banking platforms is a thing of the past?

What is essential is that you plan and prepare well.  Assuming sufficient buy-in from CFO or CEO you will need to start by asking yourself a number of very fundamental questions to define your goals and how you want to achieve them, for example, whether or not there should be a single unified payment process across the entire organization, or whether regional solutions fit your situation better. You will need to ask yourself, if you have the right banking environment, or whether a rationalization should precede the creation of a payment factory. How would you like to connect to the banks: via Swift or would you consider a combination of different protocols, like EBICS in combination with host-2-host connections? Which payment formats do you want to use? How do you integrate different payment processes, like operational payments, payroll payments and treasury-related payments? What is your vision on ‘payments on behalf’; is that something that is relevant for you? Once you have defined the solution roadmap for your payment hub, there is the question of how to implement and roll-out the solution globally.

Furthermore, you need to take in consideration the other side of the coin, i.e.  bank statements and bank return messages.
As you can see, getting to a single payment platform is a project that shouldn’t be undertaken lightly. It requires considerable thought and planning. Still, the benefits are very significant. Apart from the key benefits of visibility, control, security and compliance there is a distinct efficiency advantage to be realized. I believe that it’s this combination that has recently led so many corporates to take the first steps towards the creation of a centralized payment platform.

If you recognize yourself in the situation described above, it would be wise to put an emphasis on reviewing your current payment processes and to look for a solution that will help you deliver the benefits of a centralized payment platform.

Comments (1)

  • Raj Subramaniam
    Raj Subramaniam
    at 20.01.2016
    Nice article, and presents the big picture well. Relevant not only in Europe, but even in other geographies

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