The Time for Change

1. Efficiency: How payments automation can increase business efficiency

Despite advances in consumer payment technologies, many businesses still rely on outdated, manual financial processes. Internet banking, while convenient for ad hoc payments, becomes inefficient for businesses handling over 200 transactions monthly. Limitations include lack of batch processing, poor integration with accounting systems, and restricted access for non-senior staff.

Payment automation platforms offer:

• Full integration with payroll, accounting, and CRM systems

• Secure, role-based access

• Customisable approval workflows

• Bulk payment scheduling

• Multi-payment type support (Bacs, Faster Payments, CHAPS, PayPal)

• Automated bank account validation

These platforms are bank-agnostic, scalable, and consolidate access across multiple accounts, reducing reliance on proprietary banking apps.

Cash Collection is another area where automation shines. Direct Debit offers predictable cash flow and shifts control from customer to supplier. However, due to COVID-19, 28% of users cancelled Direct Debits, highlighting the need for multiple payment options (cards, PayPal, bank transfer). Open Banking now enables direct bank-to-bank payments via embedded buttons on websites or apps—faster and up to 50% cheaper.

Efficiency Review Conclusions:

• Productivity Boost: Automation reduces manual data entry and frees up staff time.

• Error Reduction: Manual processes lead to duplicate payments and fraud. Automation and OCR can prevent these.

• Consolidated Platform: Cloud-based solutions reduce costs and improve visibility.

• Payment Channel Savings: Choose the most cost-effective method for each transaction.

Actions:

• Review and consolidate payment platforms
• Assess hosted automation solutions
• Explore new payment types
• Build a business case for automation

2. Tackling Fraud: Identifying Vulnerabilities and Protecting Your Business

Fraud is rising, with internal threats often more damaging than external ones. UK businesses lose £190 million annually to fraud, 40% of which is internal. Common fraud types include:

Internal:

• Payment diversion
• Fake vendor fraud
• Fraudulent refunds
• Ghost payroll

External:

• CEO Fraud
• Bank mandate fraud
• Invoice fraud
• Malware

Manual processes in accounts payable and payroll are especially vulnerable. For example, a BMW-Mini employee siphoned £6 million by altering supplier details.

Prevention Measures: 

• Hands-Off Automation: Match purchase orders with invoices, use OCR for invoice scanning, and automate file polling.

• Segregation of Duties: Separate roles for payment preparation, approval, and submission.

• Machine Learning: Detect anomalies like unusual amounts or new accounts.

• Whitelist/Blacklist Tools: Prevent payments to suspicious entities.

Additional security tools:

• Monitor and replay user behavior
• Flag and block suspicious activity
• Provide audit trails for investigations

Manual processes are costly and insecure. Automation removes tampering opportunities and enhances fraud detection.

Actions:

• Adopt best practices across the payments
• IMplement end-to-end automation
• Integrate document and payment systems for tamper-proof workflows

3. Financial Visibility: Consolidated Insight and Flexible Control

Automated payments provide SMEs with better cash flow management, working capital optimisation, and risk reduction. Benefits include:

• Multi-bank cash management
• REal-time dashboards
• Avoidance of late fees and access to early payment discounts
• Comprehensive audit trails

Fragmentation Issues: Even small businesses face data silos. Manual reporting wastes staff time and limits insight. Automation consolidates views across all accounts and locations.

Cloud-Based Platforms: Enable browser-based, mobile-friendly access to all payments. Unlike internet banking, which lacks integration and scheduling, cloud platforms offer real-time visibility and control.

Flexibility: Mobile alerts and approvals allow managers to act quickly on missed or delayed payments.

Additional benefits:

• Early payment discounts (e.g., 2% for 10-day settlement = 36% annual return)

• Real-time tracking of invoices and cheques

• Access to cost-effective payment types (Faster Payments, Direct Debit, PayPal)

Automation improves insight, control, and decision-making.

Actions:

• Reduce reliance on internet banking
• Explore Faster Payments and Direct Debit
• Evaluate current working capital management

4. Regulation & Compliance: Turning Obligation into Opportunity

New regulations affect businesses of all sizes, not just banks. These include:

• Anti-fraud mandates
• Electronic invoicing
• ISO 20022 essaging standards
• Open Banking and PSD2

New Payments Architecture (NPA): Led by Pay.UK, aims to modernise UK’s retail payment infrastructure with global interoperability.

Industry Trends:

• Seamless payment experiences (e.g., Uber, Amazon)
• Rise of challenger banks and FinTechs
• Real-time payments in nearly 50 markets

Late Payments Directive: EU and UK regulations enforce 30-day terms for public sector and 60-day for private sector payments. Penalty interest can be charged for delays.

Anti-Fraud Obligations: KYC requirements may span jurisdictions. Businesses must verify customers and screen transactions against sanctions lists to avoid reputational damage.

From Obligation to Opportunity: Partnering with payment solution providers helps businesses stay compliant while focusing on growth.

Compliance is complex but manageable with the right tools and partners.

Actions:

• Ensure payment scheme compliance
• Use early payment discounts
• Understand KYC obligations
• Partner with trusted providers for ongoing compliance

5. The Digital Economy: Meeting Digital Expectations

The digital economy demands simplicity, speed, and security. Key trends:

• Everyone’s Going Digital: COVID-19 accelerated online self-service and Open Data adoption.

• Paying Is Easier: Multiple payment options improve customer experience.

• Cloud Changed the Game: Legacy systems can’t keep up; cloud solutions are essential.

High Expectations: Employees expect intuitive systems. Poor usability affects productivity and profitability. Cloud-based platforms support mobile approvals and lights-out processing.

Checkout Experience: Must be seamless and cost-effective. Backend inefficiencies negate frontend success.

Digital Economy Roadmap:

• Security: Non-negotiable
• Speed: Instant payments expected
• Simplicity: Easy access to financial data
• Scalability: Handle low-value and high-volume transactions

Actions:

• Use Faster Payments to improve service
• Offer multiple payment options
• Replace outdated systems
• Consider hosted cloud services for security and flexibility

6. Conclusions: The Competitive Advantages of Payments Automation

Manual processes are inefficient and vulnerable to fraud. They hinder visibility, compliance, and customer satisfaction. Payment automation offers:

Holistic Benefits:

• Boosted productivity
• Reduced errors and fraud
• Access to diverse payment options
• Improved cash flow management
• Compliance assurance
• Readiness for digital economy demands

Next Steps: Choose solution partners with proven security, scalability, and innovation. Assess vendor stability and technical architecture.

Business Case for Change: Each benefit supports a strong ROI. Collectively, they make a compelling case for automation.

It’s time for change. Payments automation delivers measurable business advantages.