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20-12-2018 09:00

How to future-proof your payment factory

You may already have a centralised payment and collections hub, but it’s important that you regularly review and improve its processes. By continually upgrading your payment factory, your business can scale, evolve and navigate new risks. Here are our key recommendations.

We recently discussed the geopolitical and financial trends that are likely to drive treasuries to review their payment factories in 2019. Updating your payment factory could help you take advantage of digitalisation, new technologies and real-time, cross-border payments—all while offering significant cost savings.

However, the payment landscape is changing fast. How can you make sure your payment factory is fully optimised, and ready for whatever the future might bring? Birgitte Hoff, Product Manager for Liquidity Management Solutions at Nordea, has given us her key recommendations.

Build a strategic roadmap

If you’re a large corporate, it’s likely you’ve already centralised your payments and collections, but there’s always room for improvement. Depending on how your system has been built, it can be difficult to identify and prioritise areas for improvement—setups can be complex and differ greatly between organisations. Before you invest in any upgrades, Hoff says it’s important that you have an intimate understanding of your current system, how it’s operating in practice, and how it can support your core business even more effectively.

“You need to perform an assessment of your current payment and collections processes and have a dialogue with all stakeholders. This may involve speaking to treasury employees, the C-Suite, your bank or any enterprise resource planning (ERP) providers,” Hoff says. “Once you understand your current processes and pain points, you can start building a roadmap that’s fit for the future.”

This roadmap could highlight a range of potential improvements. “You might identify ways to simplify existing processes, automate routine tasks and speed up administrative work, or operate on-behalf-of payment and collections. You can also look at ways to allocate human resources more effectively,” Hoff says. “And it’s not just about efficiencies. By improving the transparency of your payments and collections, you may be able to reconcile payments and send or receive goods faster—and that leads to a better customer experience.”

Hoff believes it’s also important to look into strategic possibilities. “The more centralised your payment flows are, the better your overall view of liquidity is,” she says. “That allows you to free up working capital and invest it, or use it to improve your core products. You should think about how your payment centralisation can add strategic value to the wider business.”

Boost your cyber defences

The cybercrime landscape is constantly evolving. Treasuries are facing a range of threats, including social engineering, malware, ransomware and distributed denial of service (DDoS) attacks. And with digitalisation and instant payments speeding up transaction cycles, there’s more pressure on treasuries to be able to spot and mitigate these attacks quickly.

Hoff says this should be a strategic consideration when upgrading your payment factory. “By optimising your payments centralisation, you can give yourself much greater control and visibility of your global finances,” she explains. “You can also restrict access to critical payment processes, putting a smaller group of individuals in charge of moving funds. This can improve your overall security posture.”

“Harmonised and transparent payment processes could become one of your best defenses against fraud, safeguarding you from potential attacks by cyber criminals,” adds Hoff. Further centralisation of payments can also improve accountability and traceability, speeding up security issue resolution time. “If a cyber security incident does happen, it will be easier to trace what went on—and you can learn from these lessons to mitigate against future incidents.”

Leverage new data flows

For treasuries, adding strategic value to the business increasingly depends on data. The data extracted from your channels and payment cycles can offer immensely valuable insights—but it can be difficult to make sense of it all. And your deployment of new technologies like artificial intelligence (AI) and robotic process automation (RPA) may depend on having easy access to data flows.

“How you centralise your payments and collections can have a big impact on the type of data you’re able to extract and interpret,” says Hoff. “The right data can give you better visibility of processes, helping you identify areas for automation. And it can be a powerful asset when combined with AI and analytics.”

“That means you should consider which technologies you’ll be using in the future—and which types of data can help you get the most from them. The type of data flows you establish can be used by AI-driven analytics engines to draw actionable, strategic insights about everything from risk to liquidity.”

Plan for standardisation

With the introduction of the Single Euro Payment Area (SEPA), the data standard ISO 20022 became key to harmonisation between treasuries, banks and other financial institutions. Despite being commonly associated with the EU, ISO 20022 is a global standard—and is gradually being adopted by corporates and banks in countries around the world. A growing number of financial services are reliant on XML.

“With the spreading of XML, there are strong opportunities to use the same standards for payments, collections and reconciliations across borders. That can help companies become less dependent on national payment schemes,” explains Hoff. “All parties involved can benefit from the standardisation of payment data. It can drive down supply chain complexity, speed up payment cycles and put your organisation in a better state when it comes to compliance.”

Get the advice you need

When it comes to transforming your payment factory, who can you turn to for support? Hoff says it should be a collaborative, ongoing project between your organisation’s finance and IT teams. “We know from experience that it takes resources, knowledge and buy-in from both the finance and IT sides of the business,” says Hoff. “You need input from both departments—or you won’t succeed at harmonising your payment processes.”

She says it’s also important to work with the right external partners. “Depending on the scale of your payment factory transformation, you might consider bringing in external consultants,” suggests Hoff. “You could also reach out to your ERP provider for advice and inspiration.”

Above all, having a discussion with your bank can help you decide on the strategic improvements you want to make. “At Nordea, we’ve helped more organisations to establish payment factories than any other Nordic bank,” says Hoff. “We draw on our years of experience to discuss the best way of improving your payments centralisation.”

Request a bespoke setup

“How you upgrade your payment factory will differ between every business—we don’t believe in a one-size-fits-all approach,” adds Hoff. “It depends on many factors—your geographic location, the countries you operate in, your business structure and strategic goals.”

“That’s why we consider every payment factory on a case by case basis. We help perform diagnostics and advise you how to optimise your payments centralisation, so you’re in a better position to achieve your strategic goals. In the near future, we’ll be able to offer even stronger support for payment factories, with reconciliation tools that help you benefit from the XML standards, and virtual accounts.”

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