2021 has been a challenge in a number of ways for businesses, just like 2020. Every industry faced its share of mishaps. This pandemic has been a huge blow to many companies, especially the finance department. They are finding it extremely hard to keep track of the regular payments. What’s happening? Let’s take a deep look.
This is George. He works as a chief finance officer in an MNC. His daily job is to open his laptop (obviously), look into the stats and graphs, provide advice to the finance team, understand what’s happening across the team, keep track of how the finance analysts send and receive amounts, ensure security on the transaction activities and make future-proof finance decisions. Imagine that he is doing it manually. What would be his top challenges? Here we go:
The payment happening across the company can be of three types in general- Customer, supplier and employee. It is not going to be 1 or 2, but hundreds of payments happening across MNCs every day. From receiving payments from the customer to sending payments to suppliers and sending employee salary, the CFO has to be aware of the payment activity status. When there is a delay in the payment, it wouldn’t be an easy task for his team members to call the bank’s customer care executive and enquire, “What happened to the payment?”. If this is going to be the case, there are plenty of chances for manual errors. It is also a known case that MNCs work with a number of banks. It is extremely challenging to keep track of all the bank activities under a single, manual roof.
This year has posed a great challenge for businesses trying to handle their short-term and long-term goals. To make things work smoothly, every business has to keep all their operations under review. They need to make proper changes to mould themselves with the current times under plans and development.
Let’s say George has sent an invoice to XYZ company on August 12, 2021. The expected payment date could be on August 20, 2021. The payment can get delayed for a number of reasons, making George wait and receive the payment on August 21, 2021. Maybe the transaction hasn’t been processed from the client end. The banks might be responsible owing to maintenance and other technical issues. We are all reliable on the internet these days. Hence we cannot take the risk of manually visiting the banks to check the status. The bank’s customer service operations might be packed up, leaving us to wait. It’s going to take a lot of time for us to know how George keeps track of payment delays and unpaid customers. That’s a question we need to find an answer to.
There is going to be new regulations in the upcoming days. With an overhaul in processes with Wirecard scandal, regulators would certainly look for steps to be taken to avoid such scandals in the future. Hence regulators can go on and put across tough regulations for the safety of their customers. Every business has to be aware of these regulations. Understanding it might take some time and additional resources for George. When he is dependent on manual processes, he is going to take more time than usual.
George’s worst nightmare is becoming a victim of cybercrime. Protecting sensitive information such as payment card protection and customer’s personal data would take away the credibility of their business and incur heavy losses. Hence he would be responsible to maintain the secrecy of the payment processes happening across the company.
Due to Brexit, the UK has lost its access to the European Economic Area (EEA) “passport”. The current situation has created a tense surrounding where businesses have to manage huge industry costs as well as effort. UK-regulated businesses have to find ways to adopt new processes to work with European customers and partners. This is going to bring new changes in the way transactions are carried out. If George isn’t aware of the challenges he can face due to Brexit, it might backfire his business plans in the upcoming days.
Let’s make a small calculation
The finance team of George, without a finance management system, is spending 5 hours a day to track the unreceived payments and all the transaction activities.
The amount of resources spent could easily cost anywhere between $65,000 – $100,000, and even more, depending on the size of the company.
They have all the liberty to spend that time and resources on other productive activities. But they would be held on to the liability of managing transaction activities manually.
Payment Bank automation- That’s the word you have to remember!
SAP BCM (Bank Communication Module) can act as a saviour for businesses wanting to expand beyond the horizons of manual payment tracking and automating their payment. With BCM, you can directly communicate with the bank and get information on what’s actually happening within a few seconds. You would get constant updates and reminders on payment, so there is no way for hassle in the team. No more intermediaries. By connecting with European messaging networks like EBICS (exclusively applicable in Germany, France, Austria and Switzerland) and facilitating integration with SWIFT’s Autoclient software (Alliance Lite2), you can simplify all the processes.
Previously, SAP was involving SAP FSN (Financial Service Network) solution. Even then, SAP had to depend on third parties around the SWIFT framework. To avoid this, SAP has come up with a Multi-Bank Connectivity tool with ERP integration to automate the entire end-to-end process. Based on the agreement SWIFT has reached on March 21, 2018, both SAP and SWIFT have joined hands to take the customer experience to the next level.
The financial data is extremely safe with SAP Cloud Platform Integration. You can natively predefine all the deployment models in SAP S/4HANA. There should be proper communication through configurable and predefined tools.
These are all the advantages of SAP BCM/MBC:
• Get end-to-end visibility on the payment status
• Automate all your process with file and message exchange process with SAP BCM integration
• You can add new banks to the large banking “collective” on the go
• Get technical support from the SAP team with partners specialised in connectivity processes such as CONVISTA
• Reduce the overall cost
• Simplify the technical architecture while you integrate your data into the SAP system
• Adapt and interpret various banking schemes
The good news is, SAP has integrated a global banking platform with 60 integrated banks. You can expect the process of bank connection to take place within 1-2 days. The deployment time can be anywhere between 4-8 days even if the bank you are working with is not already connected by default. That sounds like a plan, isn’t it?
SAP Multi Bank connectivity is a popular cloud-oriented solution offering a multi-bank digital channel between banks and SAP. The MBC solution also consists of several security features such as SWIFT connectivity.
We use SAP Bank Communication Management to manage multiple bank communication interfaces. This allows you to connect to different banks, track your transaction’s payment cycle, and get an upper hand over internal compliance and processing rates.
By using SAP Treasury and Risk Management application, integrate your transactions, cash flows, market data, commodity positions, and fully optimise and get real-time analysis, compliance reporting and audit trails.
SAP FSCM can offer Treasury and risk management module that integrates with Financial, Banking, Accounting to manage financial transactions, Information System, and financial risk in your business. Also, SAP FSCM offers Biller Direct module to facilitate payments and web-based invoicing.
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