According to Bob Stark, vice president of strategy at treasury management system provider Kyriba, a payment hub should be used so that all corporate payments can be approved and transmitted through a central system to banks.
Stark states that the biggest risk for the reputation of a treasurer is payment fraud as more and more cases of fraud are coming to the surface about large corporations being hacked.
Using sophisticated techniques, hackers are targeting inconsistencies in the payment processes that corporates use when transferring money to a bank. Because these systems are split over many teams and departments and occasionally, different systems for supplier payments and treasury payments, it increases the threat of fraud.
Payments are usually made on behalf of the corporate entity which is managed by the treasury department who usually leverage the in-house bank cash pools so intercompany transactions can be tracked and reconciled. Alongside this, it is common to have a multi-lateral netting solution alongside a POBO model so redundant payments and foreign exchange exposures are reduced, as Stark explains.
Stark also suggests using a shared services centre in order to prevent this as payments between the banks and corporates would be made through a centralised system or payment hub, regardless of the type, location, amount or currency which stop any opportunities for mistakes and subsequent fraud. A payment hub can also be used with outsourced and peer-to-peer transactions through non-bank channels.
Kyriba highlights that a payment hub is beneficial as it is inexpensive because the number of systems being used is reduced. As well as this, as all payments are centralised, it allows all transactions to be visible and excess balances are minimised.
Features including global bank connectivity, digital signatures and multiple levels of acknowledgement will help to combat payment fraud and to streamline the payment workflow and in turn, increase ROI.