Magazine article Business Credit

Evolving Corporate Payments Technology Remains Key Concern, Study Finds

Magazine article Business Credit

Evolving Corporate Payments Technology Remains Key Concern, Study Finds

Article excerpt

A new corporate payments and use of fintech study by European-based financial services group Nordea shows that a majority of corporate respondents from a wide variety of sectors see the lack of standardization of enterprise payment and collections formats across banks as a significant challenge.

Centralization is therefore a key objective for about 55% of Nordeas survey respondents, with more than 40% noting the value of a single payments-processing platform to tackle the complexity. Regulatory compliance and cross-border payments are also creating significant challenges for close to a third of the survey respondents. Nearly 40% say that corporations operating as an inhouse bank is an important trend, especially on a payments-on-behalf-of basis.

When it comes to top challenges for collections, those surveyed also say a lack of standardization from banks is a major issue. This in turn has been leading to difficulties with automating bank account reconciliation and account posting. Still, 82% of respondents say their companies are seeking to centralize credit and collections, with about 60% aiming to use a single credit/collections platform.

"Over the next four or five years, we expect the experience of corporate payment users to differ in three key ways compared with today," said Claus Richter, head of cash management customer solutions at Nordea. "Firstly, payments will be faster, and often in real-time. Second, there is likely to be more choice, and therefore more complexity, in the choice of payment partners, including both banks and third parties. Third, we expect to see more intelligent analytics and value-added services beyond the payment itself."

When it comes to payment innovations, more than half of the surveyed businesses expect they'll access the latest financial and payment technologies of third-party providers through their existing banks and vendors. "New payment innovations, particularly real-time payments, will impact on our business customers in particular as the faster they can make payment, the faster they can receive goods, with credit lines being freed up more quickly," said Jeppe Ostergard Sorensen, cash manager of a Nordic multinational corporation quoted in the survey report.

By 2020, Nordea analysts believe interbank payments using real-time technologies for both domestic and cross-border transactions could become widely adopted, which will have significant processing and supply chain implications. However, "There are challenges ahead in cross-border payments to take into account the obligation for all financial participants to tackle financial crime."

Over the next several years, blockchain technology solutions are also likely to continue, but there are still many outstanding issues that need to be resolved before widespread adoption, "such as volume processing and the regulatory framework in which the transactions are conducted," Nordea said.

Handling Multiple Payment Platforms

At H&E Equipment Services Inc. of Baton Rouge, LA, the firm is thinking about implementing its electronic invoice presentment and payment (EIPP) ability either through third-party providers like HighRadius of Houston, TX, or Billtrust of Hamilton, NJ, or its own in-house IT effort. Whichever option is chosen, Kurt Sorensen, CCE, CEW, CICP, corporate credit manager, thinks that even as the company builds its current platform, at some point in the near future H&E will probably need to present invoices to its customers over multiple payment platforms simultaneously. …

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