The payments landscape has become increasingly complex. Driven by the demand for corporate value-added services, rising customer expectations, and a dynamic global regulatory landscape coupled with structural changes in the financial industry, treasurers are facing challenging times. Clarity of information is essential. But can a true-view of cash-in and cash-out be achieved? Is a ‘Treasury as One’ integrated process possible? Sven Lindemann, CEO of Serrala (the new name for Hanse Orga Group) explores the notion of a new payments universe.

From your interactions with clients all over the world, what do you see as the main challenges companies are facing regarding payments management today?

From our perspective, as both an integrated and cloud-based solution and service provider, we are seeing common issues around transparency, efficiency, fraud prevention and compliance. Companies are often lulled into thinking they have all these issues covered. But further specialist investigation frequently reveals this not to be the case. Consider fraud prevention. A business may believe that it has all the elements in place to secure it from attack, and yet most organisations have not centralised their payments processes. A business with 50 subsidiaries globally could have as many payments systems and bank connections, and many more people able to approve payments. Unless each and every one of these nodes are managed fully and effectively, former employees, for example, may still be able to access corporate systems as signatories. It may sound unlikely, but we know it happens.

Centralisation is not something that must be imposed upon all payments processes, but it should concern the underlying technology. If everyone works on the same central system, wherever they are, it means the same central mandatory handling rules can be imposed and managed. This facilitates controlling, for example, access and permissions around a whole range of payment elements such as amount, bank, customer and country. Centralisation of technology also effectively erects a fraud prevention barrier, giving a single view across all nodes. In the fraud prevention context, our system can even enhance that level of control through our ‘always on’ system-wide rules-based fraud monitoring, analysis and early-warning tools.

If a lack of system centralisation is the root of the common issues, the problem is exacerbated by aspects such as customer expectation, industry regulation, and the unremitting need for treasurers to ‘do more with less’. Covering all that ground suggests a complex solution is required.

That’s not the case. Central to most corporates is the desire to focus on their core business. In the payments space, I believe most companies, wherever possible, would choose not to get overly involved in matters such as format handling, connectivity, fraud and compliance checking. There is a relatively easy way to overcome this because those corporates can outsource these tasks to a payments managed services provider such as Serrala. They still control and run their business processes but the moment a payment is approved, it can be forwarded to us to run those onerous back office functions such as format conversion, mapping and routing, routing optimisation and the connectivity to the most appropriate banking channel. Of course, as we respond to our customers’ growing requirements, so we can deploy our expanding knowledge and solution set to help many others enjoy the same benefits.

It is worth mentioning here that access to this broad and deep industry experience cannot be achieved by a business working in isolation. And this is a potentially complex scenario to manage. An international business dealing with just five network banks across 100 countries will have to develop and execute for every bank in every country, a country-specific payment dialect. In this case, 500 different formats are required. Using the right technology approach and a trusted vendor allows the treasurer to focus on what needs to be paid, how and when. With our payments routing optimisation algorithms, factors such as bank fees and even agreed wallet-share can be handled automatically. Now consider how a large company manages this alone. It’s a huge workload for that business, even across a relatively small network.

You have a large client-base; in what state do you find many companies when trying to tackle these issues?

As I mentioned earlier, only a very small number of corporations are fully centralised from a payments perspective. But a business can be centralised and still be at the mercy of multiple technology solutions. Even more commonly, we see systems fragmented along country- or region-specific lines.

Typically, we see organisations asking their banks to help them bring order to their processes, instructing them to take on the mapping and connectivity to other institutions. From what I see, the banks are usually not equipped to be able to execute these requirements automatically. Ultimately, the customer has to manage their own payments processes and find the right solution to handle their instructions in the necessary transparent, efficient and secure manner.

Paint a picture of how centralisation positively affects treasurers in areas such as order-to-cash, procure-to-pay, payments, cash visibility and data and document management.

When seen from an order-to-cash standpoint, centralisation means considerable process time savings, working capital optimisation, process security and strong compliance. And for global organisations, it can mean fewer automatic write-offs of outstanding debt; this can represent a huge amount of money saved.

Perhaps for historical reasons, many corporates run their payments separately from invoice processing. On the procure-to-pay side, an invoice generated by the supplier will be checked, matched, posted and eventually paid. Where technology centralisation has been implemented effectively, the functions can be seamless. A business can start with an open invoice, and end with a payment in the supplier’s account, with no need for human intervention. In our system, this can account for more than 85% of cases.

The reduction in exceptions alone means time- and cost-savings can be significant here too. But with a straight through automated process, so long as the master data from the supplier has not been changed in any way, there can be certainty that fraud has not been attempted. Seamless automation can also ensure all invoice discounts from suppliers are accredited. In a manual set-up, often these are missed, again potentially costing the company time and money to correct, if they are even acknowledged. It should be noted too that where seamless automation generates more accurate days payable outstanding (DPO) figures, working capital optimisation can increase accordingly.

In my view, centralised payment processing means it is possible for a business to collect and manage data at a single node, for everything from a single manual treasury payment to instructions from global payments factories and bulk payments on-behalf-of. By combining managed payments services with clear authorisation pathways, the organisation is able to assume control of the payment and all its related historical data.

Of course, the standard internal business processes used to create payments files will vary from function to function, the different needs of Accounts Payable and Treasury, for example, placing different requirements on the system. However, with the rise of real-time payments systems, these different business processes must be able to align in order to handle the data flow to banks in all the available channels. This will be the case whether accessing in the ‘classic’ mode direct to bank, or through modes such as credit and virtual card payments and even blockchain payments (the latter we see currently rising up the agenda). In effect, companies that wish to have the luxury of choosing between real-time and bulk payments will have to be able to align their entire payments stream.

For every business, everything starts and ends with a payment one way or another. It demands full visibility if the start and end points are not to be left to chance. All the information from order-to-cash and procure-to-pay must be automatically integrated and available in the treasury system, alongside treasury’s own transactional data.

Linking current with historical payments information falls to effective data and document management. A centralised payments data and document view, drawn from both short- and long-term files, enables the treasurer to immediately access everything needed to deep-dive into a specific transaction – such as an underlying invoice or requisition – prior to authorising or investigating a payment.

Given the volume of traffic in this space, from a data volume management perspective, I believe that it is important to be able to control and archive according to need. Not least of the reasons for having accessible data where it concerns European clients is GDPR compliance, in terms of both understanding the relevance of holding that data and in being able to easily delete it when requested to do so.

What solutions are available that can help corporates achieve best payments practice?

At Serrala, we cover a range of technologies. We are still very strong on our FS² SAP-integrated solutions, drawn from our vast experience as Hanse Orga. But we have grown and today we also have a new cloud suite we call Alevate. Each solution set can be run independently but we know that businesses are often more complex than that and so we are seeing a huge market interest in the combination of these two worlds; we call this our Hybrid Cloud offering.

The Hybrid model allows our customers to decide where and how to work. Accounting and payments teams, for example, may be SAP-focused, running on an installed platform, but treasury may favour the flexibility of cloud-based work. With connected data in the Hybrid environment, both sets of needs can be met, with each ‘view’ being available to the other, as required.

We can also provide a solution to the banking sector, helping their own corporate clients to benefit from our treasury and payments experience. Here, we are offering the entire cloud-based functionality for order-to-cash, procure-to-pay, treasury and cash visibility, payments, and data and document management under the name of BCrest. I talked earlier about the back office solution that banks increasingly seek to offer in support of customers. This solution helps them to address corporate client needs along the entire financial supply chain, streamlining and automating their processes. But BCrest enables banks to offer corporate clients more than treasury functionality; it is a source of data analytics.

What advantages, other than solving immediate efficiency challenges, can or should the right integrated solution deliver to businesses?

The main driver for most technology quests will be automation and efficiency. But today many requests are steered by fraud concerns, where authentication and access can create major issues for businesses. There is also a cost and resource savings imperative, not least from a working capital optimisation standpoint.

Often a project of this type is about preparing and strengthening an organisation for merger and acquisition or carve-out plans. The need for scalable solutions is therefore essential to allow data in- and outflows, to allow for the integration or divestment of entities with maximum speed and efficiency. The Serrala Hybrid approach is based on facilitating communication between the different parts of the business from day-one and, given the power of GDPR, ensuring post-carve out that all necessary data has left the seller’s system.

What questions must a business ask of any potential vendor when seeking to automate some or all of these processes?

There are some very fancy solutions on the market today but few of them are true end-to-end propositions. When seeking the most appropriate solution and vendor, it is important to take up references, asking how many customers and live implementations globally it has, and in which regions and countries. Question the technology and its ability to integrate in a dual installed and cloud environment, and, if the corporate requires managed services, to what extent are these available.

Obviously it is vital to prepare questions around software needs, from an IT and a functional viewpoint, but equally so to probe the vendor’s services, the relevance, breadth and depth of its knowledge of the markets, and how the corporate can be supported going forward because this should be a long-term relationship.