Payment Hub Implementation Checklist
This article is written by Nomentia In today’s digitalized financial landscape, optimizing payment operations is essential for businesses to stay competitive. Here is a comprehensive checklist for finance professionals looking to implement a payment hub. Payment Hub Implementation Start by assessing your payment operations, technology, and challenges. – Manual data entry leading to errors.’ – Fragmented payment processes across multiple systems. – Lack of visibility and control over payments. – High operational costs associated with payment processing. – Difficulty in compliance with regulatory requirements. – Inefficient routing of payments. – Define the scope of the payment hub project by outlining the specific areas of payment processing it will address, like accounts payable, payroll, or customer payments. – Identify the objectives of the payment hub project, including goals such as improving efficiency, reducing costs, enhancing security, and increasing visibility into payment processes. – Consider and map out what systems like ERPs and banks you need to connect to reach your goals. – Establish measurable metrics to track the success of the payment factory project, like reduced processing time, decreased error rates, or cost savings. – Align the scope and objectives of the payment factory project with the broader strategic goals of the organization and ensure that it supports and contributes to overall business objectives. Understanding digital transformation of payment operations Understanding the benefits of digital transformation for payment operations ensure buy-in from internal stakeholders. Here are some things to consider when making a business case for your future payment hub: Choosing the right payment hub In selecting the right payment hub, organizations face crucial decisions that can significantly impact efficiency, compliance, and strategic alignment. From technological capabilities to scalability and regulatory compliance the choice of a payment hub should be tailored to meet the diverse needs of modern businesses. – Evaluate how well the payment hub integrates with your current systems, such as ERP, CRM, or accounting software. – Consider whether the payment hub offers APIs, connectors, or plugins for seamless integration. – Assess compatibility with various technologies used in your organization. – Assess whether the payment hub can accommodate growing transaction volumes as your business expands. – Evaluate scalability options, such as cloud-based solutions or scalable infrastructure. – Ensure the payment hub supports additional features and functionalities without significant disruptions. – Check if the payment hub adheres to industry standards for secure payment processing. – Evaluate encryption methods used to protect sensitive payment data. – Assess security measures for fraud detection and prevention. – Determine if the payment hub can be customized to fit your unique business requirements. – Evaluate the flexibility to configure workflows, rules, payment methods and payment file formats. – Assess the user interface for ease of navigation. – Determine if the payment hub provides dashboards or reports for monitoring payment activities. – Evaluate user management features for controlling access and permissions. – Compare pricing plans and licensing options offered by different payment hub providers. – Consider implementation costs, including setup fees and training expenses. – Evaluate the potential return on investment based on efficiency gains, cost savings, and improved processes. Stages of payment hub implementation Implementing a payment hub is a pivotal undertaking requiring meticulous. The essential steps and considerations from initial assessment to deployment strategies ensure a smooth and successful integration of a payment hub within organizational frameworks. Continuous improvement in payment operations Soliciting feedback from stakeholders on the performance of the payment hub: Master your payment hub implementation Implementing a payment hub is a crucial step for organizations aiming to streamline their payment processes, enhance efficiency, and ensure compliance with regulatory standards. By following this comprehensive checklist, organizations can navigate the complexities of payment hub implementation with confidence. More Posts from Nomentia Join our Treasury Community Treasury Mastermind is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.
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Payment hub security: Everything you need to know
This article is written by Nomentia Executive summary: As businesses handle more sensitive data and cross-border transactions, payment hubs have become essential for secure and efficient payment processes. Their security features mitigate fraud and operational risks, but continuous system strengthening is crucial to address evolving threats. In this blog post, Brian Hopkins, CISO at Nomentia with over 20 years of experience, discusses the challenges in modern payment activities and the security features of payment hubs and shares best practices for enhancing payment security, ensuring businesses can trust these systems to protect their financial operations. Meet our security expert Brian Hopkins, Chief Information Security Officer at Nomentia Brian is responsible for internal operations and processes at Nomentia, including information security, data privacy and corporate ICT. Brian has over two decades of experience in payment automation, including key roles in product delivery, product management, carve-out projects, HR and information security. Brian’s extensive experience and close customer co-operation have perfected his deep understanding of how cash management has evolved in organizations, from manual repetition to process automation and exception management. Security challenges in payment activities The top security concerns regarding payments are tied to their sensitive nature. These activities involve a series of financial data, including account details, customer information, and transaction amounts. This makes payments an attractive target for cybercriminals. According to AFP’s 2024 report, 80% of organizations reported falling victim to payment fraud, with nearly 40% recovering less than 10% of stolen funds. Any breach in security could result in compromised data, fraud, or disrupted financial operations. Based on the CIA model – Confidentiality, Integrity, and Availability, we can categorize the challenges related to payment activity security as follows: These security issues are becoming more challenging because payment systems are getting more complex, often working with outside vendors and moving toward instant payments. Different payment security threats and their impacts Companies should be aware of several security threats when conducting payment activities. Some of the most common risks include: When any of the threats occurs, the most immediate impact of fraud is financial loss, which can vary significantly based on the transaction size. In cases where large sums are targeted, such as breaches involving banks with hundreds of millions at risk, the financial damage can be serious. There is also the risk of reputational harm, which can be just as damaging. Smaller fraud attempts may go unnoticed for long periods, gradually causing substantial cumulative losses, although advancements in fraud detection systems have made these harder to execute. However, one-time, high-value frauds remain a significant concern despite these improvements. Why payment hubs are an ideal solution for secure payments Due to the critical nature of payment activities, businesses must carefully evaluate the systems they use to manage payments. While ERP systems and bank portals have long been popular, these solutions can pose challenges, particularly as a company’s financial infrastructure’s complexity grows. Many ERP systems have built-in bank connectivity, but each system often operates differently. This lack of standardization can lead to complex processes, especially for organizations using multiple banks or systems. Bank portals, on the other hand, offer limited functionality and rely heavily on manual processes, which increases the risk of errors and fraud. Payment hubs come in the picture as secure places for payment activities, protecting them effectively from common frauds. One of the main advantages of using a payment hub is the ability to harmonize the payment process across multiple systems and banks. The payment hub ensures that all payments follow the specific approval processes, such as the “four-eye principle” for approvals and integrates fraud prevention features. These features can detect duplicate payments or unauthorized changes to bank account details. Additionally, payment hubs often come with robust security features like encryption and fraud detection. Payment hubs offer several security features, as mentioned, but what exactly are they? And what companies should look for in a payment hub to ensure their payment activities are secure. We’ll explore these aspects further in the next section. Important security features of payment hubs To safeguard payment hubs effectively, the platform must combine technical solutions with secure processes. When choosing a payment hub from security perspective, businesses need to make sure the providers secure the following features for their solutions: Technical security features A payment hub’s technical security is foundational, ensuring that sensitive information is protected throughout the payment process. Usually, the technical features for security are covered in information security standards such as ISO/IEC 27001. Below are these must-have features: Process-related security features Beyond the technical aspects, payment hubs also require comprehensive processes to maintain security and operational efficiency. These process-related features ensure that all employees use the hub securely, especially in large organizations. Advanced fraud detection and prevention Fraud detection features are vital for any payment hub. They ensure that potentially fraudulent activities are identified and halted before they escalate. Business continuity and disaster recovery In addition to day-to-day security features, payment hubs should have a business continuity and disaster recovery plan to ensure that payment operations can continue even in the event of an outage or cyberattack. Emerging challenges and best practices for securing payment hub As payment hubs take on increasingly important roles in managing payments for growing businesses, they are encountering new challenges. Among them, Brian Hopkins highlights two key challenges: the rise of real-time payments and the growing complexity of financial systems. Growing challenges With real-time payments, the need for stronger security becomes even more critical. Once a payment is initiated, there is very little time to detect and reverse any fraudulent activity. For example, if a fraudulent cross-border transaction is processed, it can be nearly impossible to recover the funds, especially if the payment goes to a country with less stringent financial regulations. Additionally, as payment hubs become more interconnected with external financial partners, suppliers, and customers, the potential attack surface expands. This interconnectedness introduces more entry points for cybercriminals. A cyberattack on a third-party payment vendor could have a ripple effect, impacting the primary company and its operations. These challenges are just a few of the emerging issues businesses need to address when using payment hubs. While…
How payment hubs work in the Netherlands
This article is written by Nomentia Organizations of many sizes reach a point where payment technologies become inevitable. As organizations grow, the volume of payments rises, more bank accounts need to be opened (more e-banking tokens and manual payments), ERP systems start playing a more prominent role, and you’ll likely add new entities and users, only to name a few challenges. This results in highly complex and inefficient payment processes. In recent decades, companies have increasingly embraced modern technologies to address complex business environments. Payment hubs have become more prevalent, particularly in markets like the Netherlands, to address the challenges growing companies face. In this article, we will examine how payment hubs typically operate in the Netherlands, drawing on insights from industry expert Huub Wevers. How companies in the Netherlands commonly perceive payment hubs Payment hubs are becoming increasingly popular in the Netherlands and are considered the norm for larger enterprises. Small and medium-sized enterprises (SMEs) are also becoming more aware of the benefits of payment hubs. However, due to the different nature of organizations, such as their industry or business models, payment hubs can differ significantly, leading to varying expectations from key stakeholders. Additionally, there are multiple payment technology providers, each with solutions that may vary slightly from one another. As a result, we reached out to our expert, Huub Wevers, who has extensive experience in the banking and fintech industry for several decades, to offer additional insight into how companies view payment hubs. Huub regularly engages with various organizations, discussing their payment solution needs and challenges, which has made him an expert in understanding their typical requirements and how technology can effectively support them. “We have observed a pattern where larger companies increasingly recognize the necessity of a payment hub solution. This is not only due to the burden of managing multiple bank tokens or ERP system connections, but also because of the growing threat of security breaches involving payments and finance team members. Incidents of scams, phishing, and hacking are at an all-time high. These challenges can only be addressed through secure and automated processes.” – Huub Wevers, Head of Sales Typical starting points for implementing hubs in the Netherlands The situation Huub describes is a common one, and sometimes, it takes a scam or faulty payment for companies to realize that they need to improve their processes by adopting new technologies because their current processes are simply not scalable any longer. Usually, finance becomes more complex as companies expand. Depending on the organizational structure, employees in finance, accounting, or treasury may start to notice inefficiencies in payment processes. For example, manual payments from different bank accounts and time-consuming manual three-way matching procedures (common in B2C companies) can be problematic. Additionally, ERP file formats may not align with what banks require. And it doesn’t stop there; payment control is hard to maintain centrally when your company has multiple subsidiaries with their own local bank accounts (often with different ERP systems). As the Netherlands is a major international trading hub, this is the reality for many companies based there. These challenges are widespread among companies and have not gone unnoticed. Over the years, technology vendors have played a crucial role in addressing these challenges and have made significant developments. Huub, with a long history of working for banks such as ABN AMRO and NatWest Group, has firsthand experience of these technological advancements. “While working at ABN AMRO, our team was developing delivery channels, for host-to-host bulk payment systems, that we were delivering to global companies. Since then, payment technologies have evolved to become business-critical systems for many companies.” Huub Wevers. In his roles, Huub also partnered with B2B SaaS companies to roll out payment solutions to European companies. How are payment hubs set up in the Netherlands? The setup of typical payment hubs in the Netherlands can be likened to a spider positioned at the center of a complex web of systems, banks, entities, and users, efficiently overseeing everything. In terms of system and bank integrations, hubs are commonly linked to ERP systems, accounting systems, payment service providers, banks, and third-party data providers that offer market data for making informed decisions. ERP systems gather essential information about supplier payments, which can be linked with payment hubs to automatically match payments with outstanding items. The most commonly used ERP systems in the Netherlands are SAP, Microsoft, Exact, AFAS, and Oracle. Payment hubs are typically connected to all of the company’s bank accounts either immediately from the start of implementation or gradually, depending on whether new connections need to be established or how local entities, banks, and regulations operate. These bank connections allow the hub to centrally process most payment types, regardless of whether it’s a local entity in a specific country. The most commonly used banks for corporates in the Netherlands are ING, Rabobank, and ABN AMRO. Internationally, the choice of banks varies depending on where organizations have their operations. Accounting systems can contain useful information related to transactions. By automating payment processes with a payments hub, statements can automatically be sent to these systems for accounting purposes. Some common examples of accounting systems used in the Netherlands are QuickBooks, Microsoft Dynamics, Exact, Visma, and Oracle, among others. Companies must have the most up-to-date insights into foreign exchange (FX) rates and interest rate changes, especially when dealing with market fluctuations in FX or interest payments. Payment hubs can often connect to market data providers such as Reuters, Bloomberg, or other relevant platforms and automatically apply the latest rates to reports. There is a growing demand for integrating payment hubs with payment service providers. This is because payment hubs can share statements with the providers to analyze the expected flow of money into different bank accounts from debit and credit cards, as well as other electronic payments. This also provides an indication of the available cash for executing payments in the near future. Additionally, if clients require refunds, their payments can be more easily traced back centrally. Some of the biggest PSPs in the Netherlands…
How to prepare for a successful payment factory implementation
This article is written by Nomentia Checklist for successful payment factory project A payment hub offers organizations a centralized platform to streamline payment processes and enhance financial management, especially in complex payment landscapes. Forward-looking treasury and cash management professionals are increasingly looking to safeguard and future-proof their business-critical processes with a payment hub. Proper preparation is essential for successfully building a payment factory. Here’s a comprehensive checklist for organizations planning to build a payment factory: What is a payment factory? A payment factory is a centralized system that optimizes and enhances payment processes for businesses. By consolidating and automating these processes, it allows organizations to streamline operations, improve control, and boost efficiency. Why it is important to prepare for building a payment factory Building a payment factory requires careful planning to ensure that it meets the organization’s needs, integrates smoothly with existing systems, and delivers the expected benefits for all stakeholders. Preparation helps mitigate risks, minimize disruptions, and maximize the success of the implementation. Assessing your current payment processes Evaluate existing payment workflows and processes: Before embarking on your payment factory journey, it is vital to understand what’s beneath your current payment operations, and what’s behind the processes. Things like what systems you have in place, how many bank accounts you have, where your payment files are located, which banks you work with, and how much your processes differ based on locality. Start by assessing your current payment processes to understand how payments are currently managed, the systems in place, and any pain points or inefficiencies. Identify pain points and areas for improvement: Identify bottlenecks, manual processes, errors, and inefficiencies in your current payment workflows. You should account for the fact that operating across borders can require finding a balance between centralization and local autonomy. For further understanding, read this article. Determine the scope and objectives of the payment factory project: Define the scope of the payment factory project, including its objectives, goals, and expected outcomes. Check out this article discussing payment hub scope and objectives. Stakeholder engagement in payment factory project Identify key stakeholders: Identify key stakeholders, including finance, IT, procurement, and executive leadership, who will be involved in the payment factory project. Make sure that you have buy-in from all the stakeholders and you will have clear roles and responsibilities going forward once the project kicks off. Communicate project goals and objectives: Clearly communicate the goals, objectives, and expected benefits of the payment factory project to all stakeholders. Communication is perhaps the most difficult part of the project. Managing change is never easy as some of customers can testify. Earn buy-in and support: Gain buy-in and support from stakeholders by demonstrating the value of the payment factory and addressing any concerns or objections. Cross-functional project team: Establish a cross-functional project team to oversee the implementation, with representatives from finance, IT, procurement, and other relevant departments. While it may be the finance team that will be the main user of the payment solution, other departments could also be affected. Make sure you take it into consideration from the beginning. The IT and security departments will be your biggest stakeholders as you will need to team up with them to ensure that the payment factory project is delivered, and the solution meets all compliance expectations. Setting clear objectives and requirements for payment factory implementation Define objectives and goals: Clearly define the objectives and goals of the payment factory project, like improving efficiency, reducing costs, enhancing control, and minimizing risks. Best payment factory objectives and goals are always aligned with wider organizational business goals. While some seek to be more compliant, others want to put in place uniform global processes, but in the end, all share a common drive to enable their teams to work better together while improving transparency. Specify functional and technical requirements: Specify the functional and technical requirements for the payment factory based on the organization’s needs and objectives. For example, the system should automate the end-to-end payment process, including payment initiation, validation, authorization, and execution while providing real-time reporting and analytics on payment transactions, which enables your organization to monitor cash flows, identify trends, and make informed decisions quickly. On a technical level, these requirements could include things like integration with ERP and financial systems while supporting high availability and scalability. Prioritize requirements: Prioritize requirements based on their importance to the business and their impact on achieving project goals. When prioritizing requirements for payment factories, you should consider the strategic objectives, geographic focus, and operational complexity of your operation. For example, a company looking to streamline operations in a specific region should prioritize setting up the payment factory in that location first. This requires them to focus on local compliance, integrating with regional banks, and automating processes to enhance efficiency. Once the initial implementation is successful, the company can then expand to other countries, scaling the system to handle additional bank connections and accounts. By starting small and gradually expanding, businesses can manage system complexity effectively and ensure a smooth transition to an optimized, centralized payment process. Document requirements: Document requirements in a detailed project plan or specification document to guide the implementation process. The right partner can help organizations identify their payment factory needs by leveraging their expertise to conduct thorough assessments and gap analyses. They can also assist in crafting a comprehensive RFI/RFP that captures all critical requirements, ensuring that once the scoping of the project begins, the implementation is aligned with the organization’s strategic goals and operational needs. Selecting payment factory vendor or solution Research available solutions and vendors: Research available payment factory solutions and vendors to identify those that best meet your requirements. Collaborating with an experienced partner can streamline this process, as they can provide valuable insights into the strengths and weaknesses of various solutions based on your specific needs. Additionally, they can facilitate vendor evaluations and comparisons, ensuring that you select a solution that aligns perfectly with your operational goals and technical specifications. Evaluate vendors: Evaluate vendors based on criteria such as functionality, scalability, integration…
Treasury expert’s insights: Payment hub implementation
This article is written by Nomentia Summary. A payment hub solution is a key technology to centralized cash management. Fragmented payment systems, manual payment processes, and the lack of real-time cash flow visibility pose significant challenges that can quickly lead to inefficiencies and risk management issues. In this article, based on our chat with treasury expert Pia Charron, we’re answering questions on how to implement a payment hub and what the best practices are payment hub implementation. We cover what a payment hub is in detail in this article, top 9 best payment hub solutions in 2024 here, and how to choose a payment hub solution here. As the financial landscape evolves ever more rapidly, many finance professionals are looking to implement a payment hub to streamline cash management processes and payment operations. To delve deeper into this topic, I had the privilege of interviewing Pia Charron, a lead consultant at Nomentia with over two decades of experience in treasury and cash management systems. With her extensive expertise, Pia provided invaluable insights into the intricacies of payment hub implementation and the key factors driving its success. Meet Pia Charron: A treasury expert Pia’s journey in the realm of treasury began over 20 years ago and with an extensive experience like that, there’s precious little she doesn’t know about implementing cash management and payment management systems. At Nomentia, she plays a pivotal role as a lead consultant, guiding clients through their cash management projects. Whether it is working with large multinational corporations or SMEs, Pia’s expertise spans various sectors, offering tailored solutions to meet each client’s unique needs. The role of payment hub in effective cash management Today’s finance professionals face increasing challenges from fragmented payment systems, manual processes, and lack of real-time visibility into cash flows. It’s well known that this can result in inefficiencies, errors, and difficulties in managing liquidity and risk effectively. As things stand, it’s no wonder that forward-looking finance professionals are considering implementing a payment hub that can centralize payment operations, automate manual tasks, and gain real-time visibility into financial transactions. During our chat, Pia emphasized the critical role these hubs play in enhancing efficiency and accuracy within cash management systems. By centralizing payment operations, businesses are able to significantly reduce errors and manual work while gaining better control over their financial processes. But success in payment hub implementation, as in so many other things, depends on having a clear understanding of what customers want and what they need. Understanding customer payment hub needs At the heart of payment hub implementation is the need for organizations to consolidate their payment operations. Instead of dealing with multiple banking platforms and disparate systems, a payment hub integrates all payment activities into a single, cohesive system. Central to any successful payment hub implementation is understanding how these diverse customer needs are recognized and fulfilled. Pia highlighted two primary categories of customer requirements: those seeking centralization and efficiency, and those aiming for visibility and control over their payment ecosystems. Whether it’s a multinational corporation or an SME, the customer’s goals dictate the approach to payment hub implementation. The payment hub implementation process Although each business has its own goals and requirements, all payment hub implementations start with the same situation; with an understanding of three key things: First, what goals the customer has for their payment operations; second, analyzing their current payment ecosystem and processes; and finally, collaborating to devise a strategy on how the customer’s goals can be achieved through the implementation of a payment hub: Payment hub requirements: To get your payment hub up and running, you have to start by defining the specific requirements for the payment hub implementation, including master data, required bank connections, necessary user roles, and security controls. Payment hub system setup and configuration: Once the scope of your payment hub is settled, next up is setting up and configuring your payment hub system based on defined requirements. Payment hub testing: Before being deployed, your newly set up payment hub requires rigorous testing to ensure the system functions as intended and meets requirements. Payment hub user training: The key component to effective payment hub implementation is training the admin users who can best communicate and engage internal stakeholders and train payment hub end-users on how to use it effectively. Payment hub deployment: Once the testing of your new centralized payment hub is done and users are trained, it’s time to go live. Navigating through the implementation process of a payment hub requires a systematic approach. Pia outlined the various steps involved, starting from defining customer requirements to system setup, testing, training, and deployment. Each stage is important and should be meticulously planned and executed in collaboration to ensure payment hub implementation success. Payment hub implementation challenges and solutions Despite the benefits, payment hub implementation comes with its own set of challenges. As Pia emphasized during our interview, these challenges often stem from the complexity of integrating the payment hub with existing systems and processes, which can require meticulous planning and coordination. Other common payment hub implementation challenges include: Resistance to change: Change can be scary so, it’s not entirely unheard of that employees may resist adopting new processes and technologies, which can lead to implementation delays. Scope creep: Once initial plans for payment hub implementation are made, the project scope may expand beyond the initial plans. This can, if not carefully managed, lead to additional costs and increased timelines. Payment hub customization complexity: As the payment hub is an important system that needs to support business payment operations comprehensively, customizing or tailoring the payment hub to meet specific business needs often comes up. It’s vital to be mindful of the fact that these emergent needs can be complex and time-consuming, while not serving the initially defined goals of the payment hub implementation project. Resource constraints: The limited availability of skilled resources, both internally and externally, can hamper the payment hub implementation process and lead to delays or suboptimal outcomes. It is always wise to be aware of possible pitfalls in payment hub implementation, as they can…
A guide to SME Payment hubs: Streamlined payment processes
This article is written by Nomentia There are a few things that are more important for small and medium-sized businesses than efficient payment processing. Prompt payment processing drives liquidity and makes cash flow management make sense. Smooth payment processes contribute to competitive advantage, reduce costs, help manage risks, and, in tandem with your other systems, make it clear what’s going on in your business. That’s value, is it not? Have you ever considered a payment hub? Payment hub – painless payment processes for SMEs? Payment hub – what is that? You might think a payment hub is something only large enterprises require, but nothing could be further from the truth. If you’re making payments consistently, chances are high that you need a payment hub. Large enterprises and small and medium-sized enterprises (SMEs) differ in their payment hub needs due to varying scale and complexity. While large enterprises handle high transaction volumes with diverse payment types and complex workflows across multiple subsidiaries, SMEs generally have lower transaction volumes and simpler processes, needing a payment hub that integrates easily with existing systems like accounting software. Both large enterprises and SMEs require payment hubs that seamlessly integrate with existing IT infrastructure, but SMEs tend to operate in comparatively less complex IT environments. Scalability is crucial for both. Large enterprises need hubs to handle growth and, depending on the nature of their industry, seasonal spikes in cash flow, while SMEs need flexibility to expand operations without disruption. Think about it this way; if large enterprises can leverage payment hubs to improve operations and drive financial strategy, why would that be any different for small and mid-size businesses? Aren’t they also in dire need of efficiency, accuracy, security, and other improvements in their payment processes? There’s no better way to bring together multiple payment channels, methods, and transactions for streamlined processing and management. Payment hub functionalities for SMEs: When implemented right payment hubs provide several concrete benefits for finance and treasury teams. SME payment hub success stories “NOMENTIA’S WEB-BASED, EASY TO CUSTOMIZE SOLUTION WITH ALREADY-ESTABLISHED BANK CONNECTIONS WAS THE MOST OBVIOUS CHOICE.” Greenchoice was struggling with ineffective manual cash management processes across multiple banks. They sought to streamline operations, improve visibility into cash flows, and simplify payment processes with Nomentia. Nomentia’s web-based, customizable solution offered established bank connections and affordable pricing, aligning with Greenchoice’s needs. Read about Greenchoices success with Nomentia here… Brita was burdened by complex payment processing due to using multiple banks and lacking a centralized system. To address these issues, they opted for Nomentia, a single tool independent of banks, to streamline their payment operations. Implementing Nomentia required strategic moves such as ensuring subsidiaries use the same ERP system and connecting with group banks for all payment types. Read about Brita’s success with Nomentia here… When implementing a modern payment hub there is no shortage of challenges. Luckily, they can be overcome with forethought, careful planning – and support. Payment hub implementation and integration strategies for SMEs Implementing a payment hub to centralize your payment operations can seem like a daunting task, but there’s no reason for dread. With careful planning and consideration of key factors, payment hub implementation will lead to streamlined payment processes and improved efficiency. We had the good fortune of having a seasoned treasury professional to give us the details. Roadmap to payment hub implementation success Before selecting a payment hub, clearly define your objectives and requirements. It’s good to consider factors such as the volume of transactions, types of payment methods used, integration with existing systems, and scalability for future growth. Understanding your needs will help you choose a solution that aligns with your business goals. Money’s always tight, so it is essential to choose a payment hub solution that offers enough bang for your buck. Look for providers that understand your needs while providing the necessary payment hub features and functionalities. As your business grows, your payment processing needs will evolve too. Selecting a payment hub solution that can scale with your business, accommodating increasing transaction volumes, new payment methods, and expansion into new markets is the best way to future-proof your payment operations. Make sure that your chosen payment hub solution offers scalability without compromising performance or incurring significant additional costs. Integration with your existing systems is critical for the seamless adoption of a payment hub, which is why you should prioritize payment hubs that offer easy integration with popular accounting software, ERP systems, and other essential business systems. It’s always best to choose a provider that offers pre-built integration and APIs that simplify the integration process and minimize disruption to your operations. To make sure your payment operations hit the ground running when your payment hub implementation is ready, follow these steps: Steps to payment hub implementation success Common payment hub challenges and concerns SMEs are often concerned about wastage while their opportunities tend to be hampered by limited resources like budget, personnel, and time. Pricing models are a key factor when lessening these worries, but it’s equally important to prioritize features that streamline payment processes and reduce manual effort, allowing you to maximize the efficiency of your existing resources, while not jeopardizing security. Adopting modern technologies like a payment hub can breed cyber security concerns that need to be addressed. A payment hub solution provider that prioritizes security and compliance, with robust encryption, tokenization, and fraud detection measures in place should be on top of every SMEs list if their security principles are built on technical expertise. Experienced payment hub providers who offer comprehensive support and guidance throughout the implementation process should also offer training programs, documentation, and ongoing customer support to help your team gain the necessary skills and knowledge. Also Read Join our Treasury Community Treasury Mastermind is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.
Intercompany Transactions Guide: Meaning, Management & Strategies
This article is written by Nomentia Intercompany (IC) transactions (or intra-group transactions) are heavily used in the operations of multinational corporations, where financial exchanges between entities within the same corporate group occur frequently. While these transactions offer operational flexibility and efficiency, they also present unique challenges in terms of efficient accounting processes, compliance, and financial reporting. In this blog post, we’ll dig into the intricacies of intercompany transactions and explore strategies for effectively managing them. There will also be a bonus case study on what optimized intra-group payment setups can look like. But first, let’s have a closer look at what IC transactions actually mean and how they work. The meaning of intercompany transactions Despite there being various types of intercompany/intra-group transactions, they can generally be defined as transactions that occur between different entities within the same parent company or corporate group. These transactions can involve the transfer of goods, services, or financial assets between subsidiaries, divisions, or other affiliated entities within the organization. Types of intra-group transactions Intercompany transactions can be categorized into three main types based on the direction of the transaction and the relationship between the entities involved: The categorizations help to understand the directional flow of transactions and the dynamics within the corporate group. Each type of transaction serves specific business objectives and requires careful consideration of factors such as pricing, documentation, and compliance with local regulatory requirements. Examples of intercompany transactions When it comes to the actual transactions themselves, various examples are relevant for finance, accounting, and treasury teams. They illustrate how diverse the nature of intercompany transactions is and how crucial they are for multinationals to function properly. The most common examples of intercompany transactions include: Each intra-group transaction requires a slightly different approach, varying stakeholders, documentation, or compliance. It can be very challenging for companies to manage them efficiently and transparently. How does the intercompany transaction process work? To provide more clarity about the actual work that goes into each example of IC transaction, you can look at the related processes that consist of several steps involving various stakeholders within the organization along the way. How these tasks are divided highly varies in each organization. Yet, you can usually see that the process looks similar to the one below: 1. Identification of intercompany transactions Companies need to identify transactions that occur between different entities within the same corporate group. These transactions may include sales of goods, provision of services, loans, transfers of assets, royalties, or other types of financial exchanges. 2. Recording transactions Once identified, intercompany transactions are recorded in the accounting records of the participating entities. Each transaction is recorded at fair market value, which is the price that would be agreed upon by unrelated parties in an arm’s length transaction. 3. Elimination process The transactions need to be eliminated in consolidated financial statements to avoid double-counting. When the parent company prepares its consolidated financial statements, it combines the financial results of all its subsidiaries into a single set of financial statements. To ensure accuracy, intercompany revenues, expenses, assets, and liabilities are eliminated during the consolidation process. 4. Intercompany pricing One of the critical aspects of intercompany transactions is determining the transfer price, which is the price at which goods or services are transferred between related entities. Transfer pricing is crucial for tax purposes and to ensure that each entity within the corporate group is fairly compensated for its contributions. 5. Documentation and compliance Companies must maintain proper documentation of intercompany transactions to comply with accounting standards, tax regulations, and transfer pricing rules. This documentation typically includes intercompany agreements, invoices, pricing policies, and other relevant records. 6. Tax implications IC transactions can have significant tax implications, especially when they involve entities in different tax jurisdictions. Tax authorities scrutinize the transactions to ensure they are conducted at arm’s length and that transfer prices are set in accordance with regulations to prevent tax evasion and profit shifting. 7. Risk management Managing risks associated with intercompany transactions is crucial. Companies need to ensure compliance with regulations, mitigate transfer pricing risks, and maintain transparency in their financial reporting to avoid legal and financial repercussions. It is clear that IC transactions play a vital role in the operations of multinational corporations, facilitating the efficient allocation of resources, sharing of expertise, and coordination among different entities within the corporate group. Simultaneously, it’s a time-consuming process that requires many steps, stakeholder management, and documentation. Let’s zoom in on the documentation aspect further, since that’s where companies can optimize processes in particular. Documentation is a critical part of managing IC transactions Traditionally, intercompany transactions are documented through various means to ensure proper record-keeping, compliance, and transparency within the corporate group. Some common documentation methods include: Even if this documentation process sounds labor-intensive, there are ways to make it more efficient, by adopting dedicated tools, for example. Other improvements and strategies we’ll discuss more in detail below. Strategies to optimize intercompany transactions Optimizing the documentation and other labour-some tasks related to intercompany transactions involves implementing efficient processes and leveraging the right technologies. Some of the most common strategies to optimize intercompany documentation include: Create efficiency with standardization Establish standardized templates, formats, and procedures for documenting intercompany transactions to ensure consistency and efficiency across the organization. Automation through technology Utilize accounting software and enterprise resource planning (ERP) systems to automate the generation of invoices, recording of transactions, and reconciliation processes. To take it a step further, you can connect these systems to a treasury management system to fully integrate the processes with all entities’ banks. Automation through technology typically reduces manual errors, saves a lot of time, and improves data accuracy and transparency. Establish a centralized repository Maintain a centralized repository or digital database to store all intercompany agreements, invoices, and documentation. This ensures easy access to relevant information and facilitates better compliance monitoring and auditing access. This can also be done with dedicated technology. Implement electronic signatures Implement electronic signature solutions to expedite the approval and execution of intercompany agreements and other documents. Electronic signatures…
Comparing solutions: payment hubs vs. banking portals
This article is written by Nomentia Every company needs to make payments, either through banking portals or payment technologies. In this article, we’ll compare what it’s like to manage payments through bank portals versus in a payment hub. We’ll also elaborate on the pain points of using traditional corporate e-banking tools and the key benefits and features of using payment hubs. Lastly, we provide some guidance on selecting a solution that suits your company’s needs. What is a payment hub? A payment hub is centralized software that consolidates company-wide payments by gathering data from multiple payment initiating systems, such as ERP, banks, treasury, accounting, or financial systems. It streamlines payment procedures, enabling transactions across various banks and channels from one platform. This centralization enhances efficiency, reduces manual errors, improves visibility and control over financial operations, and ultimately optimizes cash management while reducing costs associated with manual work. How do online banking portals work for payments? Companies pay their bills through banking portals by setting up transfers from within the bank account, similar to wiring money in retail banking. In corporate banking, it usually starts with an invoice, salary payment or other form of credit that someone in the finance or accounting team verifies. Then, a person responsible for payables logs in to the company’s online banking portals and sets up a transaction that corresponds with this data. Typically, companies need to log in to several banks to minimize the risk of having only cash in one account at one bank. Yet, this also means that cash is divided over various bank accounts. Hence, payables need to be made from various banks, each requiring a separate login. This process can become very time-consuming with numerous banks, and it is also more challenging to see how much cash is available for payments since cash is spread over various accounts without central visibility. What is the difference between a payment hub and an online banking tool? A payment hub is offered by a specialized payments provider that has build a technology that can be used by companies for company-wide payments across all banks from a single place. In contrast, online banking portals are offered by banks and are essentially just a way to manage bank accounts, payments, and all other associated administration that comes with corporate accounts. The most common pain points without a payment hub There are several pain points associated with setups that do not include a payment hub, especially when companies start growing in size with an increasing number of payments from various bank accounts. These are some of the most common ones that our customers have faced before implementing a hub: 1. Difficulties having centralized cash insights When cash balances are scattered over various bank accounts, it is incredibly difficult to say what the company’s current cash positions are, although this can be of great strategic importance. On top of that, it is difficult to track in and outflows when this data is distributed. 2. Processing payments is time-consuming Another challenge that finance, treasury, or accounting teams face with online banking portals is that all payments must be made manually and individually in each portal, which is incredibly time-consuming with tens, hundreds, or thousands of daily payments. 3. Dependent on banking credentials As your team expands, managing users will become increasingly complex, as banking portals often require various tokens to log in. Unfortunately, these tokens are usually still physical devices, so you’re highly dependent on always bringing them with you. Suppose you need to access 10 bank accounts you may need 10 different tokens, and when traveling around, or even just between home and the office, that can be quite inconvenient. 4. High risk of fraud and errors Manual payments via banking portals are prone to errors since every transaction requires manual data entries. Erroneous payments have dire consequences for company finances. Fraudulent payments are also much harder to identify since you need to review all payments manually to see if there are any potential anomalies. 5. No security checks or other process controls Whenever you make payments from a banking portal, you miss some critical steps that payment hubs can offer automatically. Or, if done manually, it becomes very time-consuming. These steps include security checks in payment processes to tackle fraud, prevent errors, enhance matching, or screen against sanctions—something that programmed computers can do easily and much more efficiently. 6. Challenges in keeping up with a high number of payments As mentioned before, the more payments you need to execute through different banking portals, the more time you spend on doing so. Sometimes, this means that it’s challenging to keep up with the number of payments. Rather than tackling the issue by hiring more people, it is very common to get automated payment technology that can easily help you streamline processes. 7. Almost no integration possibilities Banks themselves offer very limited integration possibilities with financial, accounting or ERP systems, therefore processes cannot be automated properly. Yet, these same systems contain crucial information for finance, accounting, and treasury teams’ payment operations. Ideally, they are fully integrated with banks to provide a central source of truth. While this is partially possible through building bank connections with banks, this requires a lot of work from your team and several IT specialists. A dedicated technology that handles everything is therefore a lot easier to manage. The benefits of using a payment hub Companies can benefit in multiple ways from using a payment hub, some of the most mentioned benefits include: One of the primary reasons for acquiring a payment hub is its ability to centralize all payment files, irrespective of the banks or source systems that are involved. It connects to all your bank accounts via the most appropriate connectivity protocols, enabling you to execute payments centrally and access all relevant cash flow data from the same system. This gives you better control over your finances and helps you streamline your payment processes. Automating and centralizing payment processes can help you save…
Insights from the Nomentia Treasury Summit 2024: Navigating the dynamics of modern treasury management
This article is written by Nomentia Treasury management – For the future In an engaging opening address, Nomentia’s own Lauri Bergström and Tapani Oksala painted a vivid tableau of the ever-evolving landscape of treasury management and Nomentia’s customer-centric and dynamic approach to its developments. Three key trends emerged as focal points: financial strategy, risk management, and technological advances. Emphasizing the critical role of teamwork and leadership across organizations, the duo set up a robust foundation for the summit’s discussions. Unlocking liquidity management: The story of Caverion and the dynamics after an M&A The event kicked off in full with a deep dive into the complexities of liquidity management, as exemplified by Caverion’s finance operations amidst a strategic merger. In this session, Viljami Vainikka, Head of Group Treasury at Caverion, provided a comprehensive overview of Caverion’s liquidity landscape during a merger with Assemblin, highlighting their approach to optimizing cash visibility and addressing challenges in cash flow forecasting. He outlined Caverion’s liquidity management setup, which includes cash management across multiple currencies, numerous bank accounts, and entities, with a focus on optimizing liquidity and improving forecast accuracy. In conversation with Tapani Oksala, Vainikka shed light on the challenges of optimizing cash visibility and underscored the importance of robust and accurate cash forecasting, leveraging technology and strategic partnerships, and the potential for integrating AI to enhance liquidity planning processes to increase efficiency and accuracy. Key takeaways from “Unlocking liquidity management” How BioNTech dealt with turbulent times In the second presentation of the Nomentia Treasury Summit, Dirk Schreiber, Head of Treasury at BioNTech, shared with the audience insights into BioNTech’s journey amidst the centennially turbulent times leading toward the COVID-19 pandemic and its aftermath. Founded in 2008, BioNTech experienced initial challenges until the onset of the COVID-19 pandemic in early 2020. Recognizing the potential of their mRNA technology for developing a COVID-19 vaccine, BioNTech swiftly pivoted its focus, leading to the rapid development and distribution of a vaccine in collaboration with Pfizer. Schreiber highlighted the unprecedented growth and financial influx that followed the successful vaccine development, presenting BioNTech’s treasury management journey in response to these dynamic circumstances. With a surge in funds, BioNTech urgently required a robust treasury management system to manage its expanding financial operations. Despite facing initial challenges with an untested treasury function, Schreiber and his team swiftly implemented a treasury management system, leveraging Nomentia’s expertise to build BioNTech’s treasury operations. The presentation explored the intricacies of BioNTech’s treasury transformation, emphasizing the rapid expansion of requirements for the treasury and the establishment of essential treasury guidelines and processes for future development. Schreiber emphasized the critical role of the right technology in this transformation, particularly the implementation of Nomentia’s treasury management system to provide real-time visibility into cash positions, automate trading activities, and streamline reporting processes. Key takeaways from “How BioNTech dealt with turbulent times” Panel discussion: Bank as your partner in the fight against financial crime The panel discussion featuring representatives from Nordea, SEB, and OP shed light on the evolving landscape of financial crime prevention and the role of banks as strategic partners. Against the backdrop of increasing cybersecurity threats, the panel emphasized the importance of collaboration between banks and corporate treasuries in combating financial crime. As technology evolves, it brings with it new and exciting opportunities to those companies that are able to manage their risk appetite accordingly. Unfortunately, the development of technology also provides opportunities to the criminal element. The threat landscape in the digitalized business environment is significantly more complex than before. Thanks to technology we’re living in an environment wrought with crime and fraudulent behavior. The ecosystem of crime in the digitalized financial environment is complex and ever more susceptible to human error and poor processes. The panel’s discussions centered on the adoption of innovative technologies and best practices for enhancing security and mitigating risk in treasury operations. This session focused on the crucial role of proactive measures and strategic partnerships in safeguarding financial assets in an increasingly digital world. According to the panel, treasury management and financial professionals would do well not to treat the fight against financial crime as a digital problem only, as the evolving threat landscape requires an adaptive and nimble approach not only to security technology but the organizational culture as well. Fortunately, this is not a fight that businesses have to face on their own. The banking and finance industry has taken proactive steps to improve its resilience and business continuity. On the legislative side, the EU’s DORA (Digital Operations Resilience Act) is a great example of how demands for businesses to secure their operations in the financial threat landscape is not only a digital undertaking but requires a wider scope that encompasses their operations fully. Key takeaways from “Bank as your partner in the fight against financial crime” Digitalizing bank account management with smart workflows at EATON In the 4th presentation of the day, Stefan Müller from Eaton discussed the digitalization of bank account management (BAM) during the Nomentia’s Treasury Summit. Previously, BAM was cumbersome and fragmented, involving manual tasks, email exchanges, and Excel spreadsheets. Eaton recognized the inefficiencies and partnered with Nomentia in 2019 to modernize their BAM processes. The transformation involved leveraging advanced digital technologies to automate tasks like account openings, closures, signatory changes, and transaction monitoring. This shift required comprehensive cleanup of account and signer data, process documentation, and target workflows. By mid-2021, the project was underway, and by March 2022, the new BAM system was live. Today, Eaton manages BAM operations on one centralized platform, gaining efficiency, control, and compliance. Automated reconciliations and streamlined workflows have reduced manual efforts significantly. The treasury function has seen tangible benefits, including the closure of 200 accounts and the removal of over 200 signers and 2,300 permissions. The digitalization of treasury operations has offered opportunities for greater control and efficiency. Real-time data access enables informed decision-making and proactive risk management. Automation of routine tasks frees up time for strategic analysis. However, increased reliance on digital platforms necessitates robust security…
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