Sungard : Collaborative Financial Management (CFM) Solution
With the upcoming changes in the European payments landscape treasurers should take the initiative to centralise existing payment processes within their own organisational borders.
At a recent conference hosted by SunGard a few striking comments were made by delegates that shows an evident evolution in markets. While on the one hand the Internet and new technologies have transformed almost every market there are a few key processes that have remained relatively untouched. "It's a bit odd that we can move physical goods cheaper then we can move money." commented David Blair, Head of Treasury for Nokia in a panel discussing the impact of regulations.
This fact has not gone unnoticed. All signs indicate that it is set to change rapidly. "We have a set of rules and regulations that were designed for financial marketing that were largely isolated. They are now inconsistent with a market that needs to be integrated," said Alberto Giovannini of Unifortune Investment Management. The consensus is that the often quiet pace of change in the European payments landscape is set to become a loud roar as changes get underway.
Borders will no longer matter in a very short period of time within Europe. However, the full implications for treasury departments, for the most part, is currently only a polite conversation over drinks at treasury conferences. SunGard AvantGard has recognised this issue and has worked with leading clients that want help centralising their payment operations to provide a "payments factory" with AvantGard Payment Hub.
FACING THE LEGACY
Current systems were just not designed to handle the required interconnectedness to deal effectively with the changes in the payments landscape. "With payments originating from multiple systems it is impossible to have an organisational view of activity," says Andrew Ross – Product Manager for Strategic Initiatives at SunGard AvantGard.
"Even when the changes come, many companies are not facing up to the challenges of improving their payments processing. Leading organisations are assessing their operations and creating payment factories within their European organisations. AvantGard Payment Hub was designed to give organisations improved control and visibility over their entire payments process."
With every change there are institutions that lead the pack and turn what is often seen as a compliance measure into a competitive advantage – and this change is no different. Many organisations will continue processing payments within organisational silos but many are looking to re-engineer the process and reap significant benefits.
The advent of SEPA is a case in point: failure to take advantage of a market infrastructure that offers a streamlined cross border settlement channel represents a significant opportunity cost for an organisation. “Doing nothing” is not an option as it entails a significant duplication of effort and leaves the organisation exposed to unnecessary systemic risk.
"Centralising payments processing within an organisation has tremendous benefits and supports many of the stated goals of Treasurers" says Andrew Ross. "The benefits that our customers are driving towards are integrating multiple distributed accounts payable processes into one, centrally-controlled, process while creating a more efficient payment process through payment aggregation and netting. These benefits only materialise when payments flow though one central hub."
"The unique thing about the AvantGard Payment Hub is that the benefits don’t just stop there. Once this work is done, our clients are able to reduce the cost of payment execution by applying 'least-cost routing' logic and meeting ever stricter control requirements over the payment process with a single audit source for the payment flow," says Ross.
It seems somewhat obvious but a lot of organisations are not only trying to reduce costs and risks but are now beginning to look at centralising payments. With market changes, and AvantGard Payment Hub, the time is now right to explore what centralisation can do for corporate payments operations.
While the SunGard AvantGard Payment Hub can bring significant benefit on its own, it is just one facet of an overall Collaborative Financial Management Solution that has been developed by AvantGard. With the ability to touch cash coming into and out of an organization, the CFO has unprecedented information to derive the maximum value from working capital. AvantGard Payment Hub is a key piece in this overall solution.
LEAD OR FOLLOW
In essence, the changing payment landscape across Europe will only provide benefit to those organisations that get their house in order first. By centralising payments in AvantGard Payment Hub organisations can do more than just meet the requirements.