Kicking off the first day of AFP, the conference for finance and treasury professionals held in Nashville, Tennessee this year, Mike Watercott, CTP, working capital consultant, US Bank, led a discussion on striking the balance in payments with Andy Sullivan, vice president of channel sales, Bottomline and Cynthia MacGeagh, treasury manager, Clayton Homes.
During the session, the panel emphasised the importance of communication across treasury teams, understanding organisational needs, and adapting business unit-specific requirements. What this means in reality is a driven focus on enhancing cash visibility, eliminating cheques and improving fraud prevention.
Sullivan explained that while organisations are looking to get “better, smarter, faster, improve processes as far as payment goes, they need to move away from paper cheques and paper invoices that are slow, inefficient, prone to manual error and fraud. I think some strides have been made in the last 10 to 15 years, and Covid-19 became a catalyst to drive a need to automate, with remote workforces, but there’s still a ways to go.”
There are plenty of US organisations that are cheque heavy, and on the other hand, fraud issues will continue to grow. Watercott asked the panel what the motivations for automation are, and revealed that all can be summarised into four points: operational efficiency, risk management, enhanced visibility, and revenue opportunities.
MacGeagh added that collectively all her business units at Clayton Homes send out 10,000 cheques a month. “When you think about equipment, the upkeep, the security protocols, it starts to become quite cumbersome, and it takes you off the traditional business focus. Cheque outsourcing, oftentimes, integrated payables, consolidated payables is the way that you need to get there. Just because you move forward with an integrated or consolidated payable solution doesn't mean you have to do it all in one.”
Considering fraud, she stated that every organisation is susceptible to it. In the past, companies would accept cheques with a 75% name match rate; however, in the last couple of years, a 100% match is required and therefore, treasurers run into numerous mismatches. In Sullivan’s view, this impacts the operational efficiency, which is also required by financial players as a “blanket benefit.”
He concluded: “Being able to shift risk, push off the management and storage of sensitive vendor data is important, especially protecting from potentially large fraud losses. The reputational damage that potentially comes with fraud loss is something to be considered.” In the journey to accounts payable automation, automation in the vendor onboarding is crucial to keep bad actors out and Sullivan believes that “it is near impossible for most organisations to be as vigilant as they need to be.”