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Making Better Payments: Best practices for treasury teams

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Improve payment workflows, eliminate manual processes and streamline wire payments, while achieving global visibility into cash and liquidity, and improving financial controls in 2017.

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Making Better Payments: Best practices for treasury teams

  1. 1. Making Better Payments Best Practices for Treasury Teams Jason Dobbs Bob Stark
  2. 2. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 2 Jason Dobbs  Manager Actualize Consulting Bob Stark  Vice President, Strategy Kyriba Corporation Today’s Presenters
  3. 3. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 3 Today’s Discussion  Goals and objectives for a payments program  Bank Payment Connectivity  Payment Fraud – prevention & detection  Payment Factories – Integrating ERP Payments – International payment strategies & structures  Technology innovation – blockchain/DLT Making Better Payments: Best practices for treasury teams
  4. 4. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 4 What are we trying to improve upon?  Setting objectives critical to building a roadmap for improvement  Sample goals may include: – Improve program efficiency via payment “factory functions” – Improve working capital – Decrease cost of payment solutions – Improve security of payment workflows – Standardize global processes and improve visibility into payments
  5. 5. Payment (Bank) Connectivity
  6. 6. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 6 Bank Connectivity The best way to send payments depends on: • Where payments are originating • Number of banks, payments and payment types Corporate Client TMS provider manages formats / connections Domestic banks International banks Enter Payment Send Payment Secure, Authenticated Route Payment Treasury System
  7. 7. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 7 Treasury Management System Approved payments included in batch to be sent to Banks Encrypted Batch transmitted from HUB to SWIFT Network 1 2 3 Ack Levels transmitted to Kyriba HUB Ack/Nack notification provided to User and visible through dashboards Payment Connectivity workflow Want flexibility to support multiple bank channels 4 1 4 1 4
  8. 8. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 8 Bank Connectivity Options 1 2 3 Host to Host Connections Domestic/Regional Networks SWIFT Concentrator Service SWIFT Alliance Lite2 SWIFTNet Service Bureau 4 5
  9. 9. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 9 Bank Connectivity Options Connectivity Choice Description Best Scenario Host to Host (e.g. FTP) Direct connection to the bank Ideal for high payment volumes per bank Regional Network (e.g. EBICS, Zengin) Single country multi- bank network Multiple banks or high volumes in countries with these protocols (e.g. France, Germany, Japan…) MT Concentrator Sharing another entity’s BIC Restricted to MT101’s only Many banks won’t accept via another party’s BIC SWIFT Alliance Lite2 Direct connection to SWIFT Lower payment volumes SWIFT Alliance Access Direct connection to SWIFFT Higher payment volumes Fully managed service
  10. 10. Fraud Prevention
  11. 11. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 11 Fraud is a driving concern  62% of organizations have experienced attempted or actual payments fraud  34% of organizations have been subjected to a cyberattack in the last 18 months  20% of corporates report fraud committed by employees  42% of organizations reported that incidents of fraud attempts increased in 2015  64% of organizations have been exposed to business email compromise (BEC) Sources: Association of Corporate Treasurers and Association of Financial Professionals
  12. 12. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 12 Treasury Your banks Payment Initiation Payment Transmission Fraud Prevention – Payments
  13. 13. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 13 Exposure Points: Must be protected  Each exposure point opportunity for cybercrime  Exceptions to standardized process opportunity  Good news: there are good ways to protect! Fraud Prevention – Payments Treasury Your banks Payment Initiation Payment Transmission
  14. 14. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 14  Separation of duties and application of limits are key; Ensure approvals align with dollar limits  Standardization of approval workflow across all banks and all payment types is important – e.g. mandated review of attached documentation Treasury Payment Initiation Fraud Prevention – Payments
  15. 15. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 15  Payment files to bank must be encrypted  Acknowledgements/confirmations must be reviewed  Where available, apply digital signatures (e.g. SWIFT 3SKey) to authenticate exported payment files  Review payments vs. sanctions lists (e.g. OFAC) Fraud Prevention – Payments Your banks Payment Transmission
  16. 16. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 16  Alerts when suspect payments sent to accounts on industry watchlists (e.g. OFAC, EU, UN)  Integrating sanctions lists into payment workflow will offer advance notification  Also helps prepare documentation when payments are legitimate (but still match) Fraud Prevention – Payment Screening Ok Alert! Sanctions List Filter Integrating sanctions list screening into your payments workflow will help prevent and detect fraudulent activity Payments Systems (e.g. TMS or ERP)
  17. 17. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 17 • Up to 4 levels of acknowledgment (5 if you count CAMT 054) • Acknowledgements can be viewed in message format or integrated into a payment dashboard • Goal: monitor each stage of workflow (including initiating to receiving bank) Fraud Detection – Importance of Acknowledgements
  18. 18. Payment Factories
  19. 19. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 19 ERP and Treasury: duplication of flows Initiated within ERP(s) Initiated by Treasury Banks
  20. 20. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 20 Initiated by Treasury Banks Deal Settlements Centralizing Payments via TMS Payment Hub (within TMS)
  21. 21. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 21 Routing Payments from ERP Details • Payment files integrated from ERP to TMS • Payments can be fully or partially approved in ERP • TMS can add additional workflow (e.g. approvals) and will format files to bank requirements Banks Payment Hub (within TMS)
  22. 22. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 22 Payment Routing Options 1) Blind routing • Payment files are pre-approved and pre-formatted to bank requirements • TMS simply transmits payment files to the bank directly 2) Dynamic Routing • Payments imported into TMS for format transformation, additional approvals and/or application of digital signatures Routing Payments from ERP
  23. 23. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 23 Create centralized process –Required for POBO structure of IHB –Can be a system, company, team –POBO for IHB structures require intercompany agreements –Creates flexibility of payments –Increased visibility –Increased scalability Payment Factories
  24. 24. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 24 Four options for payments: 1) International wire (simplest) 2) Locally Routed (less expensive payments but greater setup effort required) 3) Non-cash intercompany (requires an In-House Bank) 4) Non-bank payment (outsourced, peer-to-peer, etc.) In-House Banks In-House Banking offers additional benefits, including centralized visibility into flows and risk exposures
  25. 25. Emerging Technologies: Blockchain
  26. 26. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 26 What is Blockchain?  Blockchain is the technology that underlies the Bitcoin virtual currency  Distributed ledger of transactions – blocks in the chain are the records  Anonymous and secure  Indisputable, as the blocks refresh simultaneously for all blockchain participants  Potential treasury applications: payments, trade finance, confirmations Blockchain
  27. 27. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 27 Distributed Ledger Technology (a.k.a. Blockchain) potentially bypasses correspondent banking network to initiate peer-to-peer payments  Banks investigating ways to develop blockchains ─ Want to leverage distributed ledgers within their technology stack ─ Potential negative: Blockchain becomes only a lower cost method (for banks) of processing payments using existing banking framework  FinTech is developing ways to bypass traditional banking ─ Will spawn opportunities for payment outsourcing and reprocessing ─ Issues to be solved = ‘trust’ and counterparty risk Blockchain for Payments
  28. 28. Summary
  29. 29. 29© 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 29 1) Identify objectives • Cost reduction, Quicker payments, Increased visibility, Improved Controls 2) Bank connectivity • Centralize connectivity • Pick appropriate channels to reach banks 3) Prevent Fraud & Cybercrime • Standardize and Centralize • Align with information security policies 4) Scale for Global Payments • Payment Factories and In-House Banking deliver efficiency and visibility Summary: Making Better Payments
  30. 30. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 30 Further reading 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
  31. 31. Questions? Bob Stark bstark@kyriba.com Jason M. Dobbs jdobbs@actualizeconsulting.com
  32. 32. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 32 Thanks for attending facebook.com/kyribacorp twitter.com/kyribacorp linkedin.com/company/kyriba-corporation youtube.com/kyribacorp slideshare.com/kyriba kyriba.com/blog
  • vanthang81

    Apr. 27, 2018

Improve payment workflows, eliminate manual processes and streamline wire payments, while achieving global visibility into cash and liquidity, and improving financial controls in 2017.

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