Innovation in payments – from real-time transactions to automation, from centralised payment hubs to the possible use of stablecoins – are reshaping expectations, operations and risk management for many companies. And for corporate treasurers, these shifts present both opportunities for enhancing strategic value together with new challenges in execution and oversight.
These were just some of the payments issues on the agenda at a recent roundtable discussion, hosted by Bottomline and the Association of Corporate Treasurers. The discussion tackled efficiency, regulatory compliance, security, business and senior management expectations, as well as the ever-present debate over artificial intelligence and change management. New technology and digitisation, including multiple use cases for AI, are helping to inform a new payment environment, one where innovation and automation are creating opportunities for a strategic re-evaluation of payment processes, but also new challenges for treasurers as they look for effective oversight and value.
A recurring theme running through the discussion centred on visibility and transparency, which in turn informed management and accountability of payment processes.
Organisations are now grappling with how to use artificial intelligence in all its guises, such as generative AI, machine learning and robotic processes (RPA). All these aspects require clear policies and procedures about when to rely on the machine, and when to ensure there is adequate human management, intervention and oversight. Such policies can ensure that AI does not make a decision when it should be a human making the decision. But it can help in that decision-making process, it can carry out calculations, bring in relevant information and make suggestions based on all the data that is available to it. But ultimately decisions will rest with the treasurer, not the AI agent.
And AI is now being used to combine payments with cash forecasting – it can aggregate payment data, recognise payment patterns to inform predictive models, combine real-time analyses with cash positions and detect anomalies. AI tools can be helpful in establishing rules for supplier payments, which in turn will help with cash flow forecasting.
The discussion revealed a number of drivers behind moves towards greater centralisation of payments. Visibility of cash was seen as one such driver. For instance, a global organisation that operates regionally or locally could experience difficulties in managing cash flows without global visibility. Or it could miss out on identifying possible efficiencies. A move towards centralisation could improve payment workflows and controls.
However, ahead of centralising payments, a good starting point is to build an efficient, standardised suite of processes to counter the widespread use of different systems as the company has grown. Often, this can be down to organisations not appreciating how efficiencies in this area can save money, reduce risks and free up individuals for more value-adding work.
As banks implement ISO 20022 (the standard governing payment messaging), there will be an opportunity for corporates to update their own payment systems to align with the standard. Although corporates are not mandated to switch to this new messaging standard, the information and data that will be part of this migration could prove transformational to payment processes, and the data analyses that can come from it. Examples include how payments made to multiple people but to the same bank account (an indication of modern slavery) would be flagged.
A consistent approach to payment structure will also allow organisations to become to “bank-agnostic”, enabling them to switch banks and payment providers with greater ease, as they will not be tied to a proprietary system.
... while faster payments create efficiency, they also demand stronger controls, so payment policies need to strike a balance between speed and governance
Another discussion point was the increasing “consumerisation” of B2B payments. Businesses are increasingly expecting the same frictionless, embedded payment experiences found in consumer apps. Whether through e-invoicing portals or integrated procurement systems, payments are becoming part of seamless, real-time digital journeys.
This trend is particularly relevant for treasurers managing collections, supplier payments or customer refunds. Embedded payments can improve efficiency, reduce manual intervention and elevate the brand experience.
However, it was noted that some friction can be good; while faster payments create efficiency, they also demand stronger controls, so payment policies need to strike a balance between speed and governance.
If treasurers trust their shared service centre to pay their salaries and suppliers, why do they not trust it to make treasury payments, such as for an FX deal or to a money market fund? Reasons why treasurers might prefer to handle some payments themselves include risk management and the strategic importance of certain payments.
Where treasury handles high-value and high-risk transactions, such as M&A-related flows and large capital movements, having direct control over these payments can reduce the risk of fraud or operational errors – especially for confidential transactions. And sometimes payments can be strategic in nature – treasury will have a deeper understanding of the financial context within which these payments are being made.
Philip Smith is editor of The Treasurer. This article is based on the discussions at a recent roundtable event hosted by Bottomline and the Association of Corporate Treasurers. The views expressed are not necessarily those of either Bottomline or ACT.
