Why And How Finance Teams Should Assess Their Need To Automate Payment Operations

For most business leaders, finding out what’s happening on their website is typically a snap. Tools like Google Analytics and others offer an exact, real-time count of visits, click-throughs, the time people spent on a page and more. Similar tools are available for executives who need to track everything from business intelligence data to marketing activities.

But good luck to the executive who wants an up-to-the-moment, precise tally of key financial metrics, such as how much cash the business has on hand. For most, it’s often a best guess. Books need to be reconciled. Different software systems must be run and pots of money added together. Little is automated, requiring far too much manual work, which is prone to introducing errors.

These kinds of problems grow with scale. There are some 4,000 financial institutions in the U.S., and many run on different software systems. From my interactions with customers and prospects, I know that a large business may send or receive payments through multiple banks and use multiple finance and accounting systems. This creates additional work to reconcile data so that the finance team can begin making sense of what’s going on.

All of this leaves an opening for a different way of managing payments across enterprises. A finance team that has a single, real-time view of a company’s finances and money movement is an empowered team. An organization operating from the same shared, up-to-the-moment financial snapshot is one that fosters better collaboration, maximizes efficiency and gets executives, managers and investors across the board thinking more in financial terms.

Lack Of Financial Visibility

The view into their own finances for most companies today is an opaque one. On average, almost half of U.S. companies with 500 to 5,000 employees use five or more systems to manage payment operations, according to the results of a 2022 survey we commissioned Harris Poll to conduct with more than 300 financial decision makers. Four in 10 said payment operations were still manual, and 88% reported problems with payment systems. Of those, 30% reported that they didn't have real-time insight into cash balances. Nearly all of the respondents (96%) reported negative impacts on their companies, including wasted employee time (41%) and increased financial risk (39%).

This isn’t just a U.S. problem. A Forrester Consulting survey (commissioned by Corcentric) of 663 cash-flow decision makers in the U.S, the U.K. and France found similar trends, with 51% facing "a lack of payment digitization, lack of automation (49%), manual payment processes (46%) and disconnected accounts receivable and accounts payable processes (44%)."

All around us, digital transformation is remaking companies and organizations big and small. Cloud-based apps offer helpful insights into an enterprise, whether for customer service reps, outbound salespeople, marketing staff or other core functions. But in finance, most accountants still show up with spreadsheets to reconcile the books and make sense of everything.

How To Assess Your Need For Automating Payment Operations

Automating payment operations can provide benefits and reduce pain points for many organizations. By collating different systems and data streams and harmonizing, structuring and displaying them into a single pane, companies can give anyone who needs access to financial information a clear, real-time view of what’s going on in the business.

Here are five questions to ask when assessing whether you need to automate payment operations.

1. Would cash-flow optimization enable you to deliver a better customer experience, make faster decisions or enable any other business additive move? If not, and you’re comfortable with weekly or monthly reconciliation of finances, automation may not be a must-have for you at this time.

2. Does your finance team have time to concentrate on strategic matters? Would it help your business if it did? By strategic matters, I mean something beyond the day-to-day managing of payments in and payments out.

3. How often does your finance team spot errors after the fact? If not at all, something is working. But if errors are all too common and there are a lot of manual processes at work, automation may help.

4. Do company leaders have confidence that they’re making financial decisions based on accurate, up-to-the-moment financial data? Would having that kind of data help your team make better decisions?

5. How fast will your payment requirements grow? If you're running a startup, automation may not be needed when you’re very small but, if you expect to grow quickly, you may want to get the infrastructure in place sooner rather than later.

The Path Forward

Achieving a simpler view of finances is no easy task for businesses. Billions of payments are sent in the U.S. every month. Many of those transactions are nonspecific—just a dollar amount with little or no context. Piecing together the movement of the money can be an accounting nightmare.

Eventually, I believe that all payments will begin and end with software. Payments and other financial operations will be embedded in products and services—and they’ll be automated. That will help give those companies a competitive edge because—as we’ve seen in the consumer space—friction-free payments are increasingly expected.

In the meantime, businesses will have to face their own finance teams and departments and decide what's right for them in terms of payment operations. The market is providing many more tools and technologies than it used to. When companies look into how much insight they have into their finances in real time, how accurate their processes are and how these things affect decision-making, executives can make better-informed decisions about their paths ahead.