As organisations extend supply chains, utilise more global workforces and expand into new markets, those that strategically manage their international bank and payments data can achieve greater efficiencies while reducing payments risks
Globalisation is accelerating the flow of people, goods and services, capital, energy and information across country borders. While this leads to many new opportunities for businesses, it also magnifies the challenges faced by corporations to send payments to a range of international recipients. Treasury and payments teams must look out for new global and regional regulations, address ever-changing country-specific payments processing nuances and know when information needs to be provided in a local language.
Beyond these external challenges, reduced liquidity and enhanced volatility means treasury is tasked with managing cash and financial risk more
efficiently. Yet this can prove difficult when internal manual processes and data decay leave treasury’s payments reference database cluttered with inaccurate, incomplete and non-standardised information.
Yet the ability to access accurate data and ensure payment delivery has become more crucial to business success. More and more companies are finding the cost of delayed payments extends beyond bank rejection and repair fees.
One of the more evident costs of inaccurate data, payment failures can cost as much as £40 each in bank rejection and repair transaction costs. Even with a more standard charge of £10 per rejected item, a manufacturer making 500,000 payments a year with a rejection rate of 10 per cent would find itself facing an annual cost of £500,000 alone, before the impact of additional employee resources required to research these failures is taken into account.
There are other, less obvious implications, too. Bad routing data and broken payments can cause delays in the supply chain, meaning critical aspects of the production process can grind to a halt. For one corporation, a failed payment that took 24 hours to manually repair resulted in $250,000 worth of lost revenue. Such situations can impact relations with key suppliers and could result in losing negotiated discounts on account of missing payment dates, as well as increased calls to payment teams.
Moreover, failed payments can affect the trust that your vendors and customers have in your business, and may also leave it with a poor reputation. In some regions, even a few missed payments can damage the reputation of an organisation enough to dissuade vendors from partnering with them. In many cases, the costs of these lost opportunities can far exceed bank fees and additionally be far more disruptive to growth of the business.
From a treasury perspective, delays in time-sensitive securities transactions designed to help manage liquidity or funding, such as the overnight repo or short-term commercial paper markets, can lead to higher interest payments, increased transaction costs or more critical liquidity issues. Bad routing data can also impede the ability to collect receivables via direct debit, creating cash-flow issues and potentially forcing organisations to rely on more expensive credit lines, and even raising the spectre of being unable to pay employees.
To overcome both these overt and hidden risks of delayed payments, increased attention has been given to best practices for enterprise resource planning (ERP) and data management. As well as helping to ensure accurate and timely payments, working to establish data standards can deliver other benefits.
“Payment data standards also help organisations create more streamlined onboarding for vendors and customers,” says Sarkis Akmakjian, senior director of product management at Accuity. “Improving this process means a shortened time to send and receive payments, and increased cash visibility for treasury.”
Furthermore, the use of standardised payment data combined with standardised messaging
formats, all travelling through reliable networks, promotes e-invoicing and allows a company to discover untapped liquidity. “Ultimately this can lead to better supplier relations, more competitive terms and bottom-line improvements,” he adds.
Accuity’s Bankers Almanac for Payments brings accurate bank and routing data into the core of an organisation’s ERP database
Still, the driving force for these new processes is the need for accurate, standardised payments data within the core ERP system. “It is critical this data is accurate at the source, given this same data is used to populate messages going through networks that reach partner banks,” warns Mr Akmakjian. “Errors in this data can lead to payment reversals, which have costly consequences to the organisation.”
Multinational organisations need to ensure they are able to offer global coverage for any payments, and include national bank codes, SWIFT and BIC codes, as well as normalised bank names and location details. Data should be constantly updated and available, when necessary, in local-language character sets.
Thus, the myriad challenges that corporate treasury faces in sending payments to global recipients is greatly eased by comprehensive and current data in their core ERP system. When businesses feel confident that they can process transactions anywhere, then they have the ability to take advantage of growth opportunities while avoiding the risks of failed payments.
Accuity’s Bankers Almanac for Payments brings accurate bank and routing data into the core of an organisation’s ERP database. With these solutions, companies can confidently process payments throughout the world. Trusted by financial institutions worldwide, Bankers Almanac supplies payments data that limits bank repair fees and ensures payments go through first time. With over 140 data professionals working in 19 languages, businesses which partner with Accuity can more readily take advantage of new markets, clients and suppliers.
As a global registrar for bodies including the Official Registrar of Routing Numbers for the ABA and as the official provider of the EPC SEPA Adherence database, Accuity collates financial data from multiple sources worldwide and adheres to a strict data collection methodology for all products. To find out how Accuity could help improve your payments efficiency visit www.accuity.com