Today's payment challenges

Payment hubs: a comprehensive and flexible solution


Managing enterprise payments continues to be complex and demanding. We live in a world where credit is tight and the macroeconomic environment is both risky and fast-changing. As a result, inefficiencies in payment processing and cash management can make the difference between a company's success and failure. 

Today more than ever, businesses need integrated solutions that address all the multifaceted business processes relating to global payments and cash management. Many high-performing organizations are deploying a payment hub to streamline and standardize their payments processing across all enterprise applications, payment types and banks.

Acting as a single payment gateway, a payment hub helps increase efficiency, improve control over funds, mitigate risk, and enhance visibility. 

A payment hub is more than just a centralized system, it is also a business strategy and a way of deploying resources efficiently. Essentially a payment hub brings together:

All payment and collection types (e.g. treasury, supplier payments, payroll, direct debits, cheques, etc.)

All balance and transaction reporting

All other corporate to bank exchanges (e.g. deal confirmations)

All transaction bank relationships

It is sensible to create a separate payment hub, designed for a range of payment types and for a wider group of users, who can each see their local or regional activity without accessing the overall enterprise treasury position. 

A corporate can maximize the benefits of a payment hub by employing best practices in five critical areas:


1. Secure controls and standardized processes

All organizations have some kind of internal control framework to manage which employees can perform specific tasks, such as making payments or viewing cash balances on bank accounts. Payment systems themselves may be too easily accessible, allowing bad habits to creep in, such as one person performing too many aspects of the payments life cycle, with the power to prepare and submit payment instructions.

Additionally, treasury teams are often too reliant on excel spreadsheets and other manual processes for performing mission-critical tasks. This can be error-prone, lacks security and it is difficult to maintain version control. 

Industry best practice

An efficient payment hub must therefore provide a platform for strengthening internal controls and visibility of banking, payment and treasury activities. 

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2. Streamlining Global Payments

Specialists in international cash management often use domestic payments wherever practical by opening bank accounts not only in countries where they have subsidiaries and branches but also in countries where they have a concentration of payments or collections. 

Industry best practice

It is vital to take into account any local differences in markets where the corporation has a significant flow of payments and collections and find a solution that incorporates these local requirements in order to benefit from maximum flexibility and lowest cost routing. The launch of SEPA is providing to be a catalyst for many organizations to implement payment hubs on a regional or even global basis; and collection hubs projects are also growing in popularity.

3. Robust multi-bank connectivity

Most medium-sized to large organizations have multiple bank relationships and use a wide range of e-banking systems. The trouble is that each of these systems is different, with disparate protocols, passwords, smartcards or USB tokens. 

So unfortunately, we have a disconnect between the corporate's back-office systems and their banking partners, with inefficient and insecure processes. This leads to a risk or error and potential fraud. 

Industry best practice

Secure multi-bank connectivity is at the core of the most successful payment hub initiatives. Increasingly, corporates and non-bank financial institutions are joining SWIFT as a proven way to achieve a range of financial, operational and strategic benefits.

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4. Effective liquidity management and cashflow forecasting

Most organizations do not have the instant visibility and control they need to optimize working capital. Payments and cash positions are tracked separately, and the combination of globalization and mergers and acquisitions has led to an expansion of international and domestic banking relationships that further fragment processes and control. 

The increasing complexity of banking relationships and the need to consolidate balance and transactional data affecting available working capital requires both global accessibility and real-time visibility. It is no longer viable for companies to be operating on partial or out-of-date information.

Industry best practice

A payment hub provides visibility over all bank accounts across the enterprise and gives a clearer picture of cash flowing into and out of the organization. Automating the reporting of cash balances directly from subsidiaries' bank accounts ensures that accurate and up to date data can be provided to the treasury team and other payments specialists, which is essential in determining the true cash position at any point in time. 

5. Preventing fraud and financial crime

Throughout the business world there is increased emphasis on fighting financial crime, including but not limited to that perpetrated by cyber-criminals, and covering "Know Your Customer" (KYC), anti-money laundering (AML) and compliance with economic sanctions. 

Industry best practice

Corporates may need to implement increased controls, not only to remain compliant but also to be able to provide audit trail information about suspicious beneficiaries, payments and transactions flagged by their banks.

Creating a payment hub with an integrated sanction screening capability is a significant advantage in the fight against crime. In addition, similar screening solutions can be deployed to identify inappropriate payments being directed to employees' private accounts, thus helping to prevent internal fraud issues. 

 

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Why Bottomline?

A robust payment hub is an integrated solution that addresses the complex business processes surrounding global payments and cash management.

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