In business, everything starts and ends with a payment. Companies receive payments from customers and make payments to their suppliers every day and the finance department is responsible for ensuring that the company is paying the right amounts and receiving the expected sums. Often, companies are processing these payments in multiple locations, with different teams working with local banks, customers and vendors. However, the move towards more digital payment methods is changing the payment landscape — rapidly.
Certainly, digitalization has increased the speed at which payments can be made, enabled the standardization of payment formats, and simplified payment processing both nationally and internationally. But there are many parts of the payment process that are still very manual and disjointed. For inbound payments, customer orders and deliveries must be reconciled against the customer’s payments and remittances to ensure payment is received in full. For outbound payments, supplier invoices are captured, processed and posted before they are sent for payment. Every time an inbound or outbound payment requires manual processing or is processed using a different enterprise system, there is a gap in the process. These gaps make the process less efficient, less secure and less transparent.
The problems caused by disjointed, manual payment processes are illustrated by two trends. The first is the increase in payment fraud. In 2017, 78% of companies were subject to attempted payment fraud. This rate of fraud, as reported by the annual Association for Finance Professionals survey, is very high and shows no sign of decreasing. Criminals are able to take advantage of weaknesses in the outbound payment process. Common fraud examples include external fraud, where an invoice is submitted with chopped or changed invoice data, incorrect payment information, or for an amount that is greater than the service provided. Inbound payments are also a problem, as accounts receivable schemes are among the most common forms of employee fraud, yet most companies do not have processes in place to prevent them.
The second trend is the global increase in payment regulations. As more nations are looking for alternative revenue streams, they are requiring the use of completely electronic invoicing methods so they can audit company payments and, therefore, tax obligations. Companies also have to comply with international regulations regarding money laundering and embargos. Staying up-to-date with all of these regulations is increasingly difficult for companies, as their finance departments are asked to manage more work with the same or fewer resources.
Increasingly, companies that want to take advantage of digital payments and avoid these problems are searching for an end-to-end payment solution that can manage both inbound and outbound payments from a central processing hub. This goal is difficult for many to achieve, however, because payments are frequently managed using multiple technology solutions or are fragmented along country- or region-specific lines. This is where cloud payment solutions can help.
Cloud payment solutions, such as the Alevate Payment solution from Serrala, provide companies with a centralized, modern payment solution that enables companies to bring together payment information across disparate enterprise systems and business units. They also provide advantages that simply digitizing the existing payment processes cannot. Cloud-based solutions enable companies to instantly support new payment formats and connect to new banks, which are difficult for internal IT teams and payment experts to set up and maintain. They can also ensure that payments are validated against the latest fraud and compliance checks. Two-factor authentication and strong cryptography help guard against password theft which could also occur internally. Combined with the fact that cloud solutions use a modern user interface, and enable users to access payment information anytime and anywhere, Cloud solutions provide companies with an additional level of flexibility, control and efficiency.
As the payment landscape becomes increasingly digital, companies need to start by reviewing their processes to close any gaps that may exist so they can prevent fraud and ensure compliance. But they should also consider going beyond digital – to the cloud – if they truly want to achieve a faster, more secure and compliant payments process.