27-01-2022 | treasuryXL | TIS | LinkedIn |

This article reviews the reasons why an Accounts Payable (AP) team’s stake in managing enterprise payment and reconciliation activity is critical for large companies before examining why AP departments do not always receive the internal prioritization or attention they deserve as enterprises make payments and financial technology investments. Finally, this article concludes by evaluating how the TIS platform equips AP — along with treasury, finance, accounting, and other internal groups, to manage and control each of their respective functions regarding enterprise payments within the solution of their choice, thereby largely eliminating the need to pick and choose which departments receive budget or funding.

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08-11-2021| treasuryXL | TIS | LinkedIn

In the early 2000s, a team of German banks began collaborating on a project to simplify and harmonize corporate payment processes across Europe. After several years of development, the Electronic Banking Internet Communication Standard (EBICS) was released and has since become a critical component of Europe’s broader corporate payments infrastructure — particularly within Germany, France, Austria, and Switzerland. With regards to the EBICS protocol, one feature of particular interest to corporates is VEU – meaning “Verteilte Elektronische Unterschrift”. In English, the abbreviation EDS is used, which stands for Electronic Distributed Signature. In this blog, a technical summary and sample use case of EDS are provided in order to demonstrate the security and data quality-related benefits for corporates and banks. For more information on EDS, you can also download EBICS’ recent technical whitepaper, which is linked here (download the PDF marked “Final” and see page 148). 

A Recap of EBICS: 16+ Years of Bringing Structure to European B2B Payment Standards  

For those who may be unfamiliar, the Electronic Banking Internet Communication Standard (EBICS) is a German-based transmission protocol that helps regulate the standards and formats that many European banks (including those in France, Switzerland, Germany, Austria, and other regions of the Single Euro Payments Area (SEPA)) use for transmitting corporate financial and payments information between one another.    

When the EBICS standard was first launched in 2005, it aimed to create a more secure way for banks to manage corporate payments and data workflows across Europe. Although several other standards already existed at the time, EBICS has since proven to be a superior standard and has become the leading protocol for conducting corporate payments in Europe. Today, EBICS is also widely considered as the role model for progress towards standardized corporate SEPA payments.  

In the years following its formation, EBICS has continued releasing updates to their financial messaging and payment standards as the European business and banking landscape evolves. This is done in order to provide the highest level of data quality, security, and privacy for all the participants in a transaction, including the financial institutions, their corporate clients, and any associated vendors, suppliers, and partners.  

As part of these updates, EBICS introduced the Electronic Distributed Signature (EDS) – also known as Distributed Electronic Signature (DES) – to allow orders and transactions to be authorized by multiple users and participants, even if they are operating at different companies or in unique locations and time-zones.  

Using EDS, an order or transaction remains stored in an initiating bank’s processing system until either the necessary number of signatures with suitable authorization have been received, a time limit set by the bank’s computer system has been exceeded, or the order is cancelled by the responsible parties.  

This process was introduced by EBICS in order to strengthen the controls used by organizations and institutions for initiating and approving large or complex payments within Europe. Today, it enjoys broad usage throughout the SEPA region and is considered a standard practice when conducting B2B payments.   

Who Benefits from Using the EDS Capability?  

EDS is most helpful for organizations that have users and personnel working remotely, or from offices in diverse locations and regions. It is also advantageous for companies that routinely pay hundreds or thousands of suppliers and business partners and that are subsequently at a higher risk of payments fraud. In practice, EDS enables a broader degree of control and oversight on payments by allowing signers from any company, location, or branch to each independently verify and approve an order before it is processed by the bank. At the same time, using EBICS provides a greater level of underlying remittance data for each transaction compared to other payment standards, which aids the participating banks and corporates in confirming the exact nature and status of each order.  

Integrating EDS to a company’s banking and payment landscape is usually handled directly within the payment platform used for transmitting payment instructions to the bank. For instance, a corporate that uses a TMS for executing Euro payments could access the EDS standard directly in the TMS, but they would also be able to rely on the initiating bank for additional oversight. For each payment initiated through EDS, the rules of submission can also be customized, and the fulfillment can be tracked automatically by each party and signer. While processing the order, there are also designated pathways for viewing the order status and alerting inactive signers that the transaction requires their approval.  

Utilizing the EBICS EDS Capability Through TIS   

When combined with TIS’ other data, system, and payment security measures, using EDS adds an additional layer of control for our banks and enterprise customers, as well as their suppliers and partners. For organizations that maintain an active presence in Europe, utilizing the EDS capability is also recommended in order to remain compliant with EBICS’ latest standards for payment processing, data quality, and information security.  

More information about other security and data privacy tactics employed by TIS can be found here. 

For TIS customers, the EDS capability is available for EBICS payments as a standard service. This means that multiple users, even those from different organizations, can view and authorize one single order. It also enables the provision of the first and/or second signature for electronic payment transactions to take place from completely separate locations. The authorized signatory is thus able to check and authorize the payment transaction orders provided from other branches or systems directly within the TIS platform. Authorized users can find the Distributed ES (VEU) option under Administration > Bank Transaction Manager Settings > EBICS > Download Configuration; the orders will be visible in the BTM Monitor. 

The EDS-specific data available through TIS includes the number of outstanding signatures required before an order is processed, the list of approved and pending signatures, and also details regarding the timeframe for signatories to approve the payment before it is automatically halted by the bank. The underlying remittance information on each order is also provided to users through TIS as a standard service.  

However, this information will only be visible to authorized users that are responsible for overseeing and executing the relevant orders; these settings can be configured by admins in the TIS system.  

For our enterprise and multinational clients, EDS is particularly helpful in instances where the payment approvers are globally distributed (such as with remote finance and treasury teams), or when making supplier payments to a diverse range of beneficiaries. This is because signatories from all parties and locations can authenticate and verify each transaction before it is processed, thereby adding an additional layer of security to the standard payment approval process. These benefits have been particularly important for organization in the real estate industry, as the parties in a transaction are often distributed across multiple regions and there are commonly numerous stakeholders involved in each payment. An overview of how EDS has impacted real estate can be found in our recent whitepaper, attached here.  

About TIS

TIS is reimagining the world of enterprise payments through a cloud-based platform uniquely designed to help global organizations optimize outbound payments. Corporations, banks and business vendors leverage TIS to transform how they connect global accounts, collaborate on payment processes, execute outbound payments, analyze cash flow and compliance data, and improve critical outbound payment functions. The TIS corporate payments technology platform helps businesses improve operational efficiency, lower risk, manage liquidity, gain strategic advantage – and ultimately achieve enterprise payment optimization.

Visit tis.biz to reimagine your approach to payments.

 

30-08-2021 | TIS |

This article begins by examining the current state of enterprise treasury and finance technology implementations, including the standard project timelines, core challenges, and ultimate outcomes. This is followed by an analysis that outlines an improved methodology for enterprises to follow as they seek to ensure the global optimization and standardization of their payment systems, workflows, and technologies.

Modern enterprises are stuck in an endless cycle of payment technology upgrades

 

For enterprise finance and treasury professionals, why does it feel like the road to payments automation and technology optimization is never complete?

If you’re an active practitioner, you’ve likely asked yourself this very question (or at least a variation of it) within the past few years. Perhaps it was during a very long and arduous TMS or ERP implementation, a major acquisition of a new entity, or a rationalization of your global bank relationships. In any case, your musings were probably due to the fact that these types of projects have become an all-too-regular occurrence (and a subsequent thorn in the side) for enterprises around the world.

As recently as 2018, data showed that the average corporate timeline for a SaaS-based TMS implementation was 10-18 months. Technology overhauls involving larger and more widely used systems, such as global ERPs, may have taken up to 3-5 years. And although these respective timelines continue to grow shorter as cloud services and other innovations rise to the forefront, projects of this magnitude still represent a massive undertaking.

During these periods, it’s common for practitioners to wind up collaborating with dozens of internal and external stakeholders, joining hundreds of calls, and spending countless hours training, testing, and configuring the new system – all while continuing to perform their core list of daily responsibilities.

The ultimate result being?

Although seasoned professionals will tell you that every implementation is different, let’s think about the bigger picture. Of course, the results of each specific project can vary drastically, sometimes for reasons far outside of anyone’s control. There may be budget constraints, bandwidth constraints, technical limitations, and even geopolitical or environmental obstructions. Employee turnover may cause undue delays as well. And yet other times, the entire project may flow smoothly and on budget from start to finish.

But looking beyond the individual success or failure of any single project, how long after each project’s completion will it be until a new technology implementation is required?

One year? Two years? Five years?

Or, in the case of global enterprises, perhaps you are simultaneously working on numerous financial technology implementations all at once, and the completion of one only results in your reprioritization of another.
Unfortunately, this endless cycle of new technology and payment upgrades is what most enterprise treasury and finance teams find themselves dealing with today, and it has become one of the primary sources of confusion and headache for global companies.

Let’s quickly evaluate the underlying complexities in more detail.

Why does global expansion often lead to excessive payments complexity?

 

Although domestic companies operating in a single country or region undoubtedly face their own degree of technology and payments complexity, the level of difficulty associated with managing a global network of systems, data, and information is exponentially greater.

What are the main reasons for this?

To begin, consider the sheer volume of payments being made across a global enterprise, including all the various locations, currencies, and payment types. For the largest companies, there may be millions of inbound customer payments occurring every day through a combination of cash, check, card, and account-to-account options like ACH and SEPA. At the same time, an equally large and diverse variety of outbound payments must be generated by the enterprise to compensate employees, vendors, and partners. And every time a new entity, industry, or market vertical is added to the mix, these volumes intensify.

Adding further complexity, consider how the payment channels and formats in use across each world region can vary broadly as well. Just to name a few, there is EBICS in Europe, NACHA in North America, SWIFT for international payments, and H2H (direct) connections that may be utilized globally. Local variations of these channels also exist in other regions, and going a step further, each of the specific banks used by an enterprise will have its own connectivity preferences for payments and information reporting. Individual clients, partners, and vendors may also request payment data to be created in specific formats such as SWIFT MT, ISO 20022, EDI, BAI, and BAI2.

Finally, the diverse compliance and security standards that exist across various countries require unique filtering and monitoring workflows to be established in different regions. Although U.S. companies may be familiar in dealing with OFAC sanction lists, FBAR statutes, and data privacy laws like GDPR, the regulatory landscape in Asia, Africa, and the Middle East looks quite different. In fact, each specific country within these regions might have its own distinct set of rules and restrictions, and these protocols must closely adhere to any time that payments data and technology solutions are managed locally.

But despite all these challenges, perhaps the largest source of headache and confusion for enterprise practitioners stems from attempting to manage a disparate and unintegrated web of back-office payment solutions.

What do we mean by this?

The back-office conundrum: too many solutions and not enough integrations

 

In 2016, research from Fortune highlighted that global enterprises were undergoing merger and acquisition (M&A) activity at incredible rates, with the five most active companies absorbing 122 new entities between them on the year. Data from more recent years showcases a similar story, and at the same time, organic growth is also driving these enterprises to open new offices, enter into new markets, and expand into new world regions.

The challenge?

As these new acquisitions and locations ultimately go on to form new company entities and subsidiaries, the underlying systems used at each locality must be connected to the enterprise’s main technology stack in order to facilitate data transmission, cash and payment visibility, and other core financial functions. But for enterprises with hundreds of already-existing entities and a steady stream of new acquisitions, consider how many systems must be connected to the enterprise’s core technology stack each year. Also consider the amount of maintenance, upkeep, and investment that managing this global network of technology requires. And finally, reflect on how each of these systems will gradually become a legacy over time and need to be replaced as new technologies and solutions rise to the forefront of the industry.

We know from experience that not all of these global systems are able to connect or integrate with one another. Perhaps some solutions are too old, the budget too insufficient, or IT bandwidth is stretched too thin to prioritize the development of proper connections. As a result, it may take days, weeks, or even months for the data and information contained within these local systems to be made available across the entire enterprise. And if these siloed systems are not isolated occurrences but actually comprise a significant portion of the enterprise’s back-office infrastructure, then almost every single financial and payments-related function will be impacted.

Without automated connectivity and integration, visibility to cash balances and payment statuses will take a hit. Creating a standardized compliance and security process will be almost impossible, and stewarding the company’s liquid assets will be hampered by a lack of transparency to global data.

Today, these siloed entity technology stacks and legacy systems are often the unintended result of sustained business growth. In fact, it’s almost natural for them to occur. However, with today’s speed of change in commerce and technology, it is no longer an option to leave each of these functions, systems, and geographies unconnected. Siloes trap data, reduce communication and visibility, and ultimately stifle growth. And in the world of payments and technology, a lack of visibility and automation will directly impact liquidity, profitability, and exposure to risk across the entire enterprise.

So then, for enterprises that find themselves in this situation, what is the best approach to optimization?

Introducing a new framework for managing enterprise payment maturity

 

In a perfect world, enterprises that need to connect all of their global technology and payments solutions, including bank platforms and 3rd party solutions, would simply integrate every system with every other system. This would effectively enable complete unification and connectivity across the enterprise’s entire network, and data could flow immediately and seamlessly across any department, entity, and location for real-time visibility and control.

Of course, active practitioners understand how unrealistic this approach would be. In reality, it would require an almost endless variety of custom integrations to be established across each internal system and potentially hundreds of banks and external solutions. Despite innovations surrounding APIs and other connectivity methods, this task would still be insurmountable, from both a budgetary and bandwidth perspective. And even if an enterprise did somehow manage to connect all these solutions together, the maintenance and upkeep required to sustain each integration would require a whole army of dedicated IT personnel and even more investment.

An alternative solution?

Given the fragmented systems landscape that exists across most global enterprises, the most effective way to achieve a holistic view of (and control over) every siloed process, system, and geography is by implementing a single Enterprise Payments Optimization (EPO) layer that sits above all other solutions in an enterprise’s technology stack. Rather than connect every platform with every other, each solution need only connect to the EPO platform instead. This drastically simplifies the process of integrating new solutions with an enterprise’s tech stack, and also automates the process of transmitting payments data between any system that is connected to the EPO platform, including those used by different entities, offices, and departments.

Although the adoption of an EPO platform requires some up-front legwork, using a vendor like TIS ensures that the complexity of connecting to banks and performing other technical functions is almost entirely outsourced. This means that formerly difficult and time-consuming tasks that were managed by internal IT teams (such as configuring and maintaining the links between external banks and internal ERPs, HR systems, and TMSs) are now managed by the EPO vendor. As formats evolve or new regulations require changes in integration, EPO vendors like TIS automatically handle the upgrades and also manage the addition of new countries, banks, and users to an enterprise’s network as growth and expansion dictate over time.

Once this type of implementation has been performed, the EPO platform can become the sole channel through which all company payment workflows and data streams are managed and controlled.

As payment instructions or files from ERPs and other back-office systems pass through an EPO platform, they can be quickly transferred to the appropriate bank or end party. In addition, data can be shared with 3rd party vendors and other companies and partners within the network. Subsequent bank statements and reports can also be transmitted from the bank through an EPO platform to the various internal departments and systems where payment instructions are originating from.

Ultimately, the information stored on an EPO platform serves as the single source of truth for payments data across all corporate departments, subsidiaries, and geographies, and it prevents enterprises and their IT departments from having to manage a tangled mess of disparate back-office connections.

EPO solutions provide the perfect option to support ongoing enterprise growth and expansion

 

While the EPO orchestration strategy outlined above is very effective at breaking down geographic and entity-specific siloes, it is also the ideal platform for fostering a strategic, long-term approach to enterprise payment maturity.

Today, the technology landscape continues to evolve rapidly, as do the payment solutions and methods used by global enterprises. In the current era, this means that approximately once every decade, a company’s existing technology infrastructure will need to be overhauled. However, because various internal solutions are installed at different times and for different purposes, the upgrades and maintenance schedules for these solutions are rarely conducted in an organized and timely fashion. Sometimes, these upgrades are not completed at all. And as a result, it’s very easy for an “optimized” payment workflow and the underlying technology stack to start falling behind the curve.

This is why adopting an EPO orchestration layer is so essential for maintaining a constant state of consistency and control.

By connecting all of the various internal systems that comprise your global payments technology stack to an EPO platform, you effectively ensure that regardless of where an entity is located or what local systems are being used, the data and information stored on their platforms is never left isolated or unaccounted for. And as older or outdated enterprise payment solutions are eventually replaced by newer and more upgraded systems, connecting them to the EPO platform in a similar fashion will ensure ongoing cohesion and connectivity across your global networks, even as various technology overhauls and system migrations occur at specific entities or locations within the enterprise.

So, if you’re a treasury or finance professional working for an enterprise with significant process, system, and global complexity — complexity that is ultimately hindering your ability to operate efficiently — ask yourself whether a new approach to payments technology could be the answer.

And if that answer is yes, we invite you to consider TIS and our newly introduced Enterprise Payment Optimization (EPO) platform.

About TIS

TIS is reimagining the world of enterprise payments through a cloud-based platform uniquely designed to help global organizations optimize outbound payments. Corporations, banks and business vendors leverage TIS to transform how they connect global accounts, collaborate on payment processes, execute outbound payments, analyze cash flow and compliance data, and improve critical outbound payment functions. The TIS corporate payments technology platform helps businesses improve operational efficiency, lower risk, manage liquidity, gain strategic advantage – and ultimately achieve enterprise payment optimization.

Visit tis.biz to reimagine your approach to payments.