Could there be another big time payments evolution in the making? Over the past few months, we’ve put a lot of focus on the payables and receivables processes, but what about the last mile? You can automate and create efficiency for all the processes in the world, but if the payments are slow or fail to provide any useful data, the process is all for naught.
This is doubly true when you move from domestic to international payments, where until recently, processing times were measured in days. But new advancements in the field have put corporate payments professionals and others in the accounting and corporate finance space in the driver’s seat.
Inbound Tracking by SWIFT Adds Visibility to Payments
One such advancement, the SWIFT Inbound Tracking solution, has opened up a new realm of opportunities for companies. Created by SWIFT, a global member-owned cooperative and the world’s leading provider of secure financial messaging services, Inbound Tracking hopes to address many of the top challenges for treasury professionals in 2021.
Touted as a way to enhance liquidity forecasting and reconciliation for corporates, payment tracking helps address the last mile of AR and gives the ability to see when a payment is on its way and when it will arrive. Inbound Tracking promises real-time visibility, proof of payment, and efficiency, providing treasury more control and understanding of their money.
Nicolas Cailly, Deputy Head of Payments & Cash Management, Societe Generale, describes SWIFT gpi as a “revolution for cross-border payments.” Here are a few ways it delivers:
New Levels of Transparency
The gpi revolution, as experienced by treasurers, has three key pillars.
- It’s Fast. With around 40% of all gpi cross-border payments settled in under five minutes, and 95% being settled in one business day, it offers a “tremendous change” over prior network experiences.
- It’s Available. Where previously if a cross-border payment stalled within the system, there was no way of immediately telling what the problem was, or even where the issue had occurred. Real-time tracking will address this and help treasury develop a clear path to fix the problem.
- It’s Transparent. All participants within the payments chain have visibility over every available data point for each payment. This remarkable level of insight includes bank fee breakdowns, FX and charge codes, and even the relative performance of each processing bank within the chain.
The Role of Integration
One of the most recent phases of the gpi revolution has been the advent of gpi for corporates (G4C). Built to work in the payment space, banks who can provide this will help corporates unlock new data. If a bank does offer this, any corporate can choose to access G4C services via their bank’s web portal, enabling it to directly execute actions such as querying a specific payment’s status.
Collaborative Business
By working with banks to connect this, companies will be able to benefit from their supplier relationships. Supplier collaboration is one of the greatest ways to extract value where none has been present before, and your customers will be able to help you while helping themselves. This collaborative mentality helps in a variety of ways:
- The What and When: It undoubtedly offers beneficiaries immediate visibility over what will be credited to their accounts and, importantly, when.
- Supply Chain Visibility: Where a business-to-business (B2B) supplier needs payment before delivering goods, certainty over the whereabouts of that inbound payment enables the business to free up customer credit lines, potentially generating considerable business value for buyer and supplier.
- Trust and Certainty: By collaborating with others, you’re able to gain more certainty and analysis. By flagging up such issues at the earliest opportunity, it gives the initiator time to take remedial action, adding greater certainty to the process, averting more complex and costly upstream investigations.
Unlocking the Value of Your Treasury Management
The payment process represents the last mile of the O2C and AR processes, and it’s something that we’ve discovered was a weak point in our webinar featuring Auditoria.ai. AI requires data, and this will provide your AI models with the necessary information to facilitate decision making. For more information on the path to inbound payments, check out SWIFT’s Inbound Tracking page. For more information on how companies can use this new data, check out our Accounting Robots webcast.
Additional Technology Resources
10 Tech Trends Set to Change the World of Corporate Finance (Part 1)
Why Forecasting Tech Should be on Your Radar
How Work from Home Has Solidified the Need for Connected Financial Close
