Why CFO's Choose to Implement Payment Factories

Why CFOs Choose to Implement Payment Factories

June 8th, 2017

Karen Webster | CEO | Market Platform Dynamics Bob Stark | Vice President, Strategy| Kyriba

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Karen Webster

CEO

Market Platform Dynamics

@karenmpd

Today’s speakers

Bob Stark

VP, Strategy

Kyriba Corporation

@treasurybob


Today’s discussion

Agenda

1) What is a payment factory?

2) Why do CFOs choose payment factories?

3) Preventing payments fraud

What is a payment factory?


ERP and Treasury: duplication of flows Initiated within ERP(s)

Initiated by Treasury

Banks


Initiated by Treasury

Banks

Deal Settlements

Centralizing Payments

Payment Hub

Determines best connectivity and format

options to the banks


Routing Payments from ERP

Blind routing Dynamic routing

Payment files pre-approved and pre-formatted to bank requirements

Option of additional approvals Payment format generation to bank requirements

Direct connectivity to bank(s) Direct connectivity to bank(s)

Receipt of payment acknowledgements Receipt of payment acknowledgements

Fraud monitoring

Digital signatures to authenticate file


Feature Description

Workflow Payments Dashboard Payment Screening (e.g. OFAC) Fraud monitoring Integration of ACKs/NACKs Control Center – for oversight of workflow requests/changes Bank balances/transactions reporting

Security Application Security – e.g. multi-factor authentication, IP Filtering Data Security – e.g. encryption at rest Payment Authentication – e.g. Digital Signatures, Encryption keys

Connectivity SWIFT Regional protocols (e.g. EBICS, Zengin, Editran, etc.) Host-to-host (FTP) Host-to-host (APIs)

Format Transformation Automated generation of bank formats Pre-developed format library (of 10,000+ scenarios)

Components of a Payment Factory

Why CFOs Establish Payment Factories


Why CFOs are establishing payment factories

1) Cost savings: Eliminate in-house costs

2) Risk Reduction: Standardization of Payment Policies

3) Global Visibility: Reduce working capital needs

4) Scalability in banking relationships: CFOs want to be

bank agnostic


1) Cost savings: A payment hub connects directly to the

bank, reducing the number of internal systems to be

maintained and interfaced:

Eliminate redundant bank service fees

Eliminate duplicate software costs

Eliminate internal IT support and SLA charges


“The average in-house supported ERP-to-bank connectivity hub will cost $500,000 annually”


2) Risk Reduction: Multiple payments systems make it

impossible to maintain standardized payment controls

Without proper controls:

Cannot comply with Sarbanes-Oxley Section 404

Increased risk of duplicate payments and missed payments

Unlikely to prevent internal fraud and external hacking


“If you’re relying on your ERP payment platform to protect against duplicate payments and fraud, it’s time for a reality check.”


3) Global visibility: Centralizing all payments in a single

system delivers complete visibility of all outgoing cash

Treasury can optimize cash balances and make effective

decisions of where to deploy cash and liquidity

Reduces working capital requirements, increasing profitability

and redeploying cash where it is needed most

Eliminates overdrafts and emergency funding scenarios


“Last minute payments, subsidiary overdrafts, and leaving idle cash in the bank costs us $300,000 every year.”


4) Scalability: Eliminates dependence on banks so CFOs

can change or add banking relationships

• Increases speed for finance to support business in new markets

• In-house maintained bank scripts tie finance to existing bank

relationships and technologies, increasing banking costs

• Can immediately migrate to new formats and technologies


“Our project was driven by the need for a single, global payment format - XML PAIN. This was out of our reach when relying on internal resources.”

Preventing Payment Fraud


Multiple Payment Systems Increases Risk of Fraud

Source: Kroll Global Fraud and Risk Report 2016

Source: AFP Payment Fraud Report 2017

PERCENT OF ORGANIZATIONS THAT EXPERIENCED

ATTEMPTED AND/OR ACTUAL PAYMENTS FRAUD

Source: AFP Payment Fraud Report 2017

DID NUMBER OF FRAUD INCIDENTS INCREASE SINCE

LAST YEAR?


Ensure all exposure points are secure

1) Secure access to software used for payment initiation, approval and transmission

2) Separation of duties and approval limits within payments software in all geographies, for all users, across all payments

3) Secure and monitored transmission to bank connectivity channel

4) Real-time Payment Confirmations and Acknowledgements

5) Full Reconciliation of Payment Transactions

6) Monitoring Payments Activity and Changes

Payment Controls

In Summary


Key Benefits of a Payment Factory

Benefit Description

Outsourced connectivity • Reduced costs (hardware, IT staff) • Reduced time to deploy

Fraud prevention • Anti-money laundering (AML) • Responsiveness (via real time acknowledgements) • Application Security (e.g. dual factor authentication, IP filtering, digital signatures) • Segregation of duties

Standardized bank connectivity

• Facilitates upgrade to XML; a single format globally for all banks • Enables mobility of bank relationships • Mitigates risk of disparate systems, formats, workflows

Visibility and Control • Centralized visibility • Standardization of process

Shared Services • Supports Payment on behalf of model (POBO) -- centralized connectivity, intercompany, and netting in single solution


Why CFOs are concerned about payments

Payment fraud is a huge concern for CIOs and CFOs

In-house bank connectivity is really expensive; and holds CFOs back

CIOs are ill equipped to offer the scalability and mobility that CFOs need

CFOs require efficiency, visibility, and better controls


Additional Resources

eBook: The Business Case for a Payment Hub: Centralizing Corporate Payments to Improve Efficiency and Reduce Fraud Download www.kyriba.com/solutions/payments

Related Blog Posts: • Why treasury shouldn’t rely on banks for OFAC screening • Making payments less risky • One size doesn't fit all - tips for designing a global connectivity strategy

http://www.kyriba.com/solutions/payments

http://www.kyriba.com/blog/bob-stark/why-treasury-shouldnt-rely-banks-ofac-screening

http://www.kyriba.com/blog/bob-stark/making-payments-less-risky

http://www.kyriba.com/blog/bob-stark/making-payments-less-risky

http://www.kyriba.com/blog/bob-stark/one-size-doesnt-fit-all-tips-designing-global-connectivity-strategy




Questions?

Bob Stark [email protected]

@treasurybob

Karen Webster [email protected]

@karenmpd

mailto:[email protected]

mailto:[email protected]


Thank You for Attending

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Why CFO's Choose to Implement Payment Factories

Economy & Finance

Transcript of Why CFO's Choose to Implement Payment Factories