After Adoption, Consolidation Of Payments Tech The Next Hurdle For Treasurers

When it comes to digital transformation, investment in shiny new gadgets is not enough. New tools have to integrate into existing systems and communicate with each other for performance improvements to reach their new potential.

Dubbed Industry 4.0, or the Fourth Industrial Revolution, digitization efforts are taking off as executives invest in technology to fuel growth. However, as growth accelerates, the integration and connectivity aspect of technology reaches new levels of complexity. That’s particularly true in the finance department. Years of growth and expansion can make the task of upgrading existing legacy financial, ERP and accounting systems a monster of a task. Add in the disparate systems of other companies acquired over the years, and streamlining existing financial systems can seem next to impossible.

According to Brian Shannon, SVP of Strategy and Operations Americas at corporate finance technology provider Serrala (formerly Hanse Orga Group), it’s not uncommon for global enterprises to stumble over their multiple, disjointed technologies.

Companies “are maintaining multiple ERP systems either because they’ve grown organically over time and haven’t had time to modernize all the systems, or they have acquired new companies and have had to integrate those systems into their IT infrastructure,” Shannon explained in a recent interview with PYMNTS. “This lack of integration between ERP systems, across geographic or business lines, causes gaps or friction points that prevent visibility into the flow of payments into and out of the organization.”

That lack of visibility into the payments arena in particular is a growing pain point as consumers demand more choices and new ways to pay. The ever-expanding payments ecosystem means there are more tools than ever to move money, and Shannon said businesses recognize that opportunity as one that can affect corporate payments, too.

“This isn’t simply about moving from checks to credit cards or EFT,” said Shannon. “It also includes new options such as PayPal, mobile payments and more.”

However, the variety of payment tools has added a new layer of difficulty in consolidating and streamlining financial systems like ERPs. Shannon said accounts payable (AP) is one area of the enterprise that exemplifies that challenge.

“The range of payment methods used by suppliers makes it more difficult for companies to gain visibility,” he said.

He noted that AP teams must first onboard and validate payment methods in their own back-end systems, ensure the master data on the supplier-side is accurate, and run compliance and background checks on those vendors before any payments can be made. Furthermore, he added, supplier information and the corresponding payment data must continually be reviewed and validated, particularly as businesses work to combat fraud.

Shannon noted that this whole process it itself quite fragmented.

“In most companies, different individuals are responsible for setting up suppliers and generating payments, and, surprisingly, much of the work is still very manual and not automated,” he said. “This work is often distributed across multiple locations as well. The lack of integration in this outbound payment process leaves gaps and friction points that cause delays and create risk.”

He pointed to the rising threat of corporate payments fraud as a key issue for corporations struggling to consolidate inbound and outbound payment channels, coordinate financial systems and gain the bird’s eye visibility they need to manage money.

Digitization, naturally, is one way to approach this streamlining effort, supporting visibility into all transactions for fraud management, cash flow management and liquidity planning, Shannon said. But, again, adopting digital tools will not necessarily lead to improved efficiency. To truly gain insight into payments, both incoming and outgoing, these payment channels — and the platforms on which financial and transaction data is stored — must be unified.

Serrala — which rebranded from Hanse Orga Group last month after acquiring several other firms, including Dolphin Enterprise Solutions and e5 Solutions — is following up its reintroduction to the market with the launch of Alevate. The cloud-based solution provides a single tool with which organizations can manage inbound and outbound payments across a range of rails and channels, while connecting existing ERP systems. Robotic process automation (RPA) technology automatically configures payment data into the correct format for businesses to manage transaction data.

As organizations continue with their digitization efforts, streamlining payment data is critical to not becoming overwhelmed by the deluge of payments and finance technology coming into play. Shannon noted that the solution, though, can be seen as a means to an end.

“[It] gives them more time to consolidate and modernize their underlying ERP systems when they have the budget and time to do so,” he said.

Time is running out, however, particularly as corporate payment technologies continue to innovate — fast. As treasurers face rising fees and shorter payment processing times, the faster payments trend could introduce new friction into the finance department — or, Shannon said, it could help corporate treasurers, if they pair faster payments technologies with the ability to access payment data in real time.

“Speeding up payments is only part of the equation,” he said. “While most of the discussion around faster payments is about automating and speeding up the receipt [of] an application of cash, companies must consider how to speed up and control outbound payments. For large corporations, faster payments, combined with real-time information on inbound and outbound payments, provides them with greater insight into — and control over — corporate liquidity.”