Moving Beyond Silos for A/R Management

Originally published on PYMNTS.com on 4/1/2016.

In managing accounts receivables, corporate banking has been marked by inefficient processes and a “silo mentality.” FTNI, in a recent e-Book, offered up a roadmap toward embracing the cloud to eliminate isolated systems and processes.

Receivables management can be as much art as science.  For banks, according to an e-Book by payments processing firm FTNI, receivables management is a constant juggling act across corporate customers, and their own internal daily ebb and flow of cash flow.  Innovation, said FTNI, is key, but the right type of innovation is even more important. 

The historically fragmented nature of disparate services and payment solutions, ranging from credit cards to ACH to mobile payments to lockbox and remote deposit capture is a driving force in corporate banking clients’ desire for truly integrated receivables solutions. Such far flung conduits mean that receivables management is increasingly siloed, and thus, less than efficient. In fact, having to manage and support multiple platforms and legacy systems cost businesses in the United States alone upward of $1 billion annually, as noted in a 2014 study by ACI Worldwide and Wiese Research Associates.

For a bank’s customers, between the constant add-ons of new platforms on top of old ones, and new services being cobbled together, the end result can quickly lead to frustration. 

Against that backdrop, the solution according to FTNI is to embrace a “truly integrated receivables platform” that is marked by flexibility and is modular in construction. Those attributes mean that implementation gets easier and can be adapted to suit any combination of users or payment methodologies. Flexibility means that receivables solutions are modular in nature and easily configured to suit different, or expanding, payments needs as customers business requirements evolve in the future.  Speaking in terms of technology infrastructure, cloud-based solutions increasingly provide the flexibility, configurability and cost savings corporate banking customers are asking for.

Integrated receivables platforms, complete with the ability to accept, process and post any payment method, via any payment channel, from a single platform, according to FTNI, have moved from a “vision,” to a reality within the market today.

And yet, oddly enough, only one percent of banks have implemented such a beneficial, streamlined processes – but then again, that represents a potential greenfield opportunity for FinTech firms – and, added FTNI, according to industry data, 81 percent of receivables and treasury executives employed at US firms say an integrated receivables platform would add value to their organizations.

The parameters of a truly integrated system would dictate it be able to work across existing banking and merchant processor relationships and support the full transaction lifecycle – starting with payment acceptance and ending with posting remittance data into any back office system. Of course, security and compliance efforts are of the utmost importance as well and in a cloud-based environment, should be present at both the application and hosting layers.

Delivering soup-to-nuts functionality across the transaction lifecycle, along with consolidated reporting and reconciliation, all within a single interface, is the sign of a truly integrated platform and the first step to helping corporate banking customers tear down traditional AR silos. These attributes take on even more importance as  92 percent of banks say that receivables management remains an important part of future revenue growth.

Integrated receivables platforms can reduce payment processing times by up to 80 percent, according to FTNI’s experience across multiple industries.

As banks evaluate truly integrated receivables solutions, FTNI stated that key considerations should include ease of use but also ease of installation, rapid deployment, seamless updates and enhancements (via “one click” functions), along with the ability to easily extend “admin rights” to corporate customers for convenient self-management.

As always, said FTNI, security requirements are at the forefront of any receivables processing and management platform, and ideally there should be multiple layers of security and compliance built-in, as opposed to bolted-on.  A related area of focus for banks is the ability identify and minimize fraud and risk. The use of automated business rules to flag, vet, and ultimately approve (or deny) transactions across all of a bank’s corporate customers, before potentially suspicious or problematic transactions get to the bank, can save significant amounts of time and resources for both the bank and its customer.  

As banks look to the future of their receivables processing and management solutions, the question of whether it is better to continue to invest in legacy, siloed solutions, or partner with a growing pool of savvy FinTech solution providers is a topic of much discussion. Ultimately, the decision will come down to a combination of factors, with corporate banking customers’ needs likely to drive how banks choose to evolve their offerings.