When payment operations aren't efficient or rely heavily on manual processes, CFOs can't manage their accounts as effectively or gain immediate insight into their financial state.
Almost half of finance leaders (48%) at companies with 500 to 5000 employees say it is hard to get a complete financial view of their company with their current finance and payment operations systems, a recent Harris Poll found.
This often occurs because they don't have a consolidated portal to get that information, especially because companies have multiple bank partners and use multiple systems to manage payments.
Payment operations include the full life cycle of money movement, from when a payment is initiated, to whether it gets completed or fails, to when it reconciles. Most companies don't have the right software to get a full view into finances, or they use disparate tools and even manual systems. The resulting lack of real-time insight into finances affects a broad array of issues, including:
- Cash management. Sometimes, companies will keep too much cash on hand to cover payment settlement risks. Other times, they'll keep too little. Neither is optimal, but companies are well acquainted with delays in payment operations. Nearly 1 in 2 financial decision-makers (48%) say their company experiences reconciliation issues at least half the time when making or receiving payments. The disconnect between available cash and payment obligations multiplies if companies partner with numerous banks. Without knowing how much cash is in each and every account at any given time, companies cannot be as confident as possible when putting money to work or developing strategic plans.
- Inability to close the books as fast as possible. Nearly one in four (23%) companies cannot close books on time because of payment operations problems, indicates the Harris Poll, done in conjunction with Modern Treasury. This happens because companies lack a reliable way to get payment data stored in multiple bank accounts imported into ERP or accounting systems.
- No full visibility into payment status, which can hurt customer service. If a big part of a finance team's job is to move money on behalf of other people, such as often occurs in marketplaces, stellar customer service means being able to tell clients where their money is at any given moment. Without automated payment operations, it's hard to do that.
- Less ability to make strategic spending decisions on the fly. Without a complete and real-time view of finances, an executive might not know, for example, if they can make a strategic but unplanned hire when the right person comes along, or have ample confidence to ramp up shorter-term investment into product development.
State of Payment Operations
Finance teams are under pressure to improve payment operations with more than four in five companies (84%) facing problems such as slow payments, a high rate of payment failures, returns and refunds and data quality errors, the Harris Poll found. What's more, the pressure is on finance teams to be more of a strategic business partner to the rest of the company.
To be a strategic partner, CFOs need to have visibility and access to data and analytics across the enterprise, according to research from Accenture. It finds that visibility of the whole enterprise is the first most effective lever to overcome barriers to strategic change. Others include analytics and access to data across the enterprise, understanding risk, a strong working relationship with the whole C-suite, and the financial authority to assess the economic basis of investment decisions.
Key to visibility and having financial authority to assess decisions is having full visibility into finances.
Automating Payment Operations
Almost all financial decision makers (99%) think upgrades to payment operations would be helpful, Harris found. Meanwhile, more than 4 in 5 (81%) say their companies would benefit from modernizing payment operations in terms of increased speed, flexibility and transparency with money movement. Specifically, companies want automatic reconciliation, the ability to manage all bank accounts in one system, and shorter payment processing times.
The good news is that new technologies–and more companies–are focusing on automating payment operations given this vast market need. Companies such as Modern Treasury offer new tools that automate the full lifecycle of payment operations, eradicating many of the pain points identified in the Harris poll and enabling greater and faster insight into company finances.
There is more to money movement than just moving money, and new solutions enable CFOs to move money with confidence and know exactly where that money is at any given moment.