Visibility over cash flows, balances and exposures, and strong, systematic controls within key functions and processes is fundamental to corporate treasury. In the 2017 annual FIS Global Payments and Bank Connectivity Study: Simplifying the Global Payments Journey, 55 percent revealed that increasing controls was a key challenge and top driver for a payment project. Payment fraud and cash visibility were close behind with 54 percent and 48 percent, respectively.
With the onslaught of payment fraud and cyber security cases continuously being covered by the news, it is not a surprise that corporations are aiming to improve processes and implement the latest in technology to help combat these challenges. Treasurers are concerned about securing end-to-end payment workflows and processes, and need to define the internal policies related to bank account mandates, signatory rules and other related bank relationship companies. Tools that can help with this are Bank Account Management (BAM) workflows and internal controls such as payment signing rules that can be imposed in payment factories. Additionally, treasurers need to agree to services with their banks that can enforce ‘end-to-end’ security. Examples include digital signatures that are sent along with payment files so that banks can validate who is signing the transactions, as well as secure bank connections, in addition to services to confirm payment statuses at the bank so that the treasurer has real-time visibility on transactions.
Having a central policy that is consistent and that, ideally, is backed by technology that can impose these policies will be essential in realizing better internal controls and combatting fraud. Some corporate treasurers have already implemented rules like checking changing bank details used for payees (compared to historical database) or checking payment details against black and white lists. These measures help increase internal controls and can be implemented in a payment factory.
The last challenge and driver relates to a core treasury responsibility. As payments are outgoing cash flows, having visibility into all payments and cash flows can be facilitated by modern payment and treasury technology. In cases where cash flows are being centralized, payments are channeled and routed via an in-house bank, requiring a centralized payment system and in-house bank system.