Payments Go Digital — The Rapid Transformation of Inbound and Outbound Payments

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In business, everything starts and ends with a payment. Companies receive payments from customers and make payments to their suppliers every day and the finance department is responsible for ensuring that the company is paying the right amounts and receiving the expected sums. Often, companies are processing these payments in multiple locations, with different teams working with local banks, customers and vendors. However, the move towards more digital payment methods is changing the payment landscape — rapidly.

Certainly, digitalization has increased the speed at which payments can be made, enabled the standardization of payment formats, and simplified payment processing both nationally and internationally. But there are many parts of the payment process that are still very manual and disjointed. For inbound payments, customer orders and deliveries must be reconciled against the customer’s payments and remittances to ensure payment is received in full. For outbound payments, supplier invoices are captured, processed and posted before they are sent for payment. Every time an inbound or outbound payment requires manual processing or is processed using a different enterprise system, there is a gap in the process. These gaps make the process less efficient, less secure and less transparent.

The problems caused by disjointed, manual payment processes are illustrated by two trends. The first is the increase in payment fraud. In 2017, 78% of companies were subject to attempted payment fraud. This rate of fraud, as reported by the annual Association for Finance Professionals survey, is very high and shows no sign of decreasing. Criminals are able to take advantage of weaknesses in the outbound payment process. Common fraud examples include external fraud, where an invoice is submitted with chopped or changed invoice data, incorrect payment information, or for an amount that is greater than the service provided. Inbound payments are also a problem, as accounts receivable schemes are among the most common forms of employee fraud, yet most companies do not have processes in place to prevent them.