For those tasked with driving forward a technology or digitally based business strategy, thinking and planning around transactional banking should not be an afterthought. There’s a lot more to it than reviewing the make-up of fees. The use of new solutions and general innovation in the payments/receipting area, whether directly with your bank or through third parties, can support efficiency and cost as well as enhancing reporting and underpinning best practice around controls. This will lessen exposure to fraud or error. Any future planning should include a base review of existing payment and receipting channels and the way in which they are reconciled.

Potential for fraud

Keeping an eye on openings for fraud is key. A recent Corporate Treasurer article concluded that with “supply chains stretched to breaking point, compliance spend all but collapsed and strange work-from-home measures; put it together and corporates can expect an uptick in fraud.” Not all fraud is linked to the finance area directly, but treasury processes must provide comfort around how money moves in, through and out of an organisation – demanding timely and accurate information around where the cash is, and who controls it. More efficient processes can be a real value-add to many businesses.

Digitised flow of information

Good cash management remains central. A survey last year by Xero in New Zealand suggested more than $7 billion was owed in overdue payments to small businesses alone – the supply chain for the whole economy. While COVID-19 has delayed the Government’s consultation process on ‘Improving Business to Business Payments’ it is working behind the scenes to encourage businesses (particularly large businesses) to make payments more promptly and speed up the flow of money through the economy. The move to digitise the flow of information — and for it to be real-time and insightful — will uncover a range of efficiencies, expose errors more quickly and provide the opportunity to fine-tune value propositions.

As many businesses continue to face uncertainties around the broader economic outlook with constant focus on their cost base, this area of treasury should not be underestimated as a contributor of value.  Value is created both in direct dollar savings and indirectly through better processes, greater efficiency around visibility and management of cash.

For treasury risk management advice and support, talk to us:
Dean Sharrar on 09-912 7590 | d.sharrar@bancorptreasury.com or
Craig Gordon on 09-914 4543 | c.gordon@bancorptreasury.com