simplifying payments - top 5 reasons why the cloud improves your payment policy

Part lll: Simplifying Payments: Top 5 Reasons Why the Cloud Improves Your Payment Policy

June 22nd, 2017

© 2017 TMS Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 2

Todd YoderDirector Global CorporateTreasury, Fluor Corporation

[email protected]

Today’s speakers

Brad TeaverPresales Executive,Kyriba [email protected]

mailto:[email protected]

mailto:[email protected]


Evolution of treasury technology

Simplifying payments with cloud technology• Best practice formula for making payments simple

Real-life examples of leveraging cloud technology• Supply chain management• FX settlements and exposure management

Top 5 reasons cloud technology simplifies and improves your Payment Policy

Today’s discussion


Poll question 1

Treasury Technology


Cloud (SaaS)

Evolution of treasury technology

Vendor

Company 1 Company 2 Company 3

Hosted

Separate install for each client

Company 1 Company 2 Company 3

Vendor hardwareOn-premise

Company


Benefits delivered by the cloud

Reduced predictable cost

Disaster recovery

Innovation

• Pay for what you need• No internal hardware or IT costs• No upgrade costs (external or internal)

• Full redundancy: no single point of failure• Higher availability: across all time zones• Improved RTO, RPO for minimized disruption

• Always on current release• Newest software tools; no obsolescence• Economies of scale -> vendor viability

Implementation and support

• Quicker implementation; no need for IT• Ease of support; every client on same version• No individual configuration/support issues


What does the cloud mean for treasury?

Treasury Workstation

1990s – 2000s 2005 2017

Cash Management

Treasury Management

System

Treasury & Risk Management

FunctionalityCash and treasury

Value propositionAutomation

DeliveryOn premise

FunctionalityCash and treasury

(and a little risk mgmt)

Value propositionAutomation

DeliveryInternet (hosted)

Treasury as a Strategic Partner to the business

FunctionalitySpecialized & advanced

Value propositionCFO enablement

DeliveryCloud

Simplifying Payments


General payment challenges

Uninformed Decision Making“We don’t have visibility into all the payments going out… Makes it hard

to invest and pay down debt with confidence.”

Email Scams“We almost wired out 800k

from one of the email scams.”

Too Many Tokens“I have a keyring of tokens I have to keep

track of… When I’m not in the office I can’t approve payments because I don’t have the

tokens with me.”

Takes Too Long“It’s very time consuming to

log into so many different portals execute payments.”

Manual Approval Processes“I have to walk the payment request down the hall to

get signatures. Then key the payment in and store the paper approval in the locked filing cabinet for

auditors.”

Fraud“We lost 100k due to fraud and my assistant treasurer lost his

job.”


Payment systems Pain for CFOs and Treasurers

Manual login to bank portals

• No automation, audit trails or controls• Outside IT’s control; completely separated from internal

systems• Unable to link internal documentation for Payment approval

Multiple systems managed by internal IT or external consultants

• Have to custom build every bank connection• Unable to maintain bank formats and format scenarios• Holds back innovation and efficiency (e.g. global payment

standard ISO20022 XML PAIN)

Third party service bureau

• Separate system required for Payment connectivity• Another vendor to manage and support desk to call• No end to end SLA• Typically lack multiple connectivity choices, increasing cost of

ownership

CFO & CTOs challenges - disaggregated systems


Fraud challenges - increasing risk of fraud

Source: Kroll Global Fraud and Risk Report 2016

Source: AFP Payment Fraud Report 2017

PERCENT OF ORGANIZATIONS THAT EXPERIENCED

ATTEMPTED AND/OR ACTUAL PAYMENTS FRAUD

Source: AFP Payment Fraud Report 2017

DID NUMBER OF FRAUD INCIDENTS INCREASE SINCE

LAST YEAR?


Simple payments equation

Centralization & visibility

Connectivity

Simple Payments


First, centralize and gain visibility


Key questions:

1. How many bank portals & systems are you leveraging for Payments today?

2. Who's responsible for file formatting and file transmissions?

3. How do you know the status of the Payment in the payment lifecycle?

4. Who's checking for fraud and making sure the correct controls are in place?


1. How many bank portals & payment systems are you leveraging for payments?

ERP/ AP Systems

Initiated by Treasury

Banks


Poll questions 2-3


Centralizing payments with TMS

ERP/AP Systems

Initiated by Treasury

Generated from

Financial Transactions

(Debt, Investments, FX)

Banks

TMS


2. Who's responsible for file formatting and file transmissions?

Intelligent routing

• Batch is approved inside of TMS’ approval window

• Cash flows are integrated into Cash Positions

• TMS will transmit the file to the bank

File transformation

• Vendor payments imported into TMS

• Individual approvals are actioned via TMS’ Dashboard

• TMS will format the appropriate file and transmit to the bank


3. How do you know the status of the payment in the payment lifecycle?

Protocol/ACK

ACK Level 1 ACK Level 2 ACK Level 3 ACK Level 4

The File has been sent to the external server.

The file has reached the bank communication network (it is applicable to the SWIFTNet

protocol). The Ack is generated by Swift.

The bank has received the file. The Ack is generated by the bank. This

is a protocolar Payment Status Report (the bank has not executed

the file yet).

The bank has executed the transaction. The Ack is generated

by the bank. This is an"applicative" Payment Status

Report.

SwiftNet Technical AckVisible in TMS Payment Dashboard :"Ack" or "Nack". This is a standard

for FileAct and Fin messages.

Visible in TMS Payment Dashboard: "Delivery" ACK. This is a standard

for FileAct and Fin messages.

Visible in TMS Payment Dashboard: Customer Payment Status Report

file is generated by the bank. There is a standard file format named ISO 20022 but most banks use format

variants.

FTP/FTPS/SFTP Technical Ack N/A

Visible in TMS Payment Dashboard : Payment Status Report is generated

by the bank to the customer through FTP/FTPS/SFTP. There is a

standard called ISO 20022 but there is some variants from bank to bank.

Visible in TMS Payment Dashboard :Customer Payment Status Report is

generated by the bank There is a standard called ISO 20022 but there is some variants from bank to bank.

TMS with Outside Bureau or Concentrator

Technical Ack NOACK on reception but needs Tech

Integration with TMS NO

Centralize status reporting

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4. Who's checking for fraud and making sure the correct controls are in place?

International sanctions lists

UNEU

Third-party lists

Paymenttransactions

Transaction approval or rejection

Alerts DetailedReporting

Payment files

Screening engine

Real-time Alerts

TMS

Data Validations- IBAN- ABA Routing #s- Supplier Accounts- Duplicate PaymentsFraud Detection- Rules Logic- Machine Learning

Centralize and standardize the control process


Second, managed connectivity

Connectivity

Key questions:

1. How are you going to connect to all the internal and external systems?

2. Who will monitor these internal and external connections?

3. How will you know they are secure?


Global Connectivity Hub connects customers with their ecosystem (banks, applications, and data)

1. How are you going to connect to all the internal and external systems?

Accounting Entries

Payment Execution

& Tracking

Balances & Transactions

Forecast Imports & Payments

Market Data & External Systems

TMS


3. How will you know they are secure?

Security features TMS Policies

Multi-factorauthentication• Token• SMS text• Swift 3SKey

SOC1 and SOC2 Type II certifications including the connectivity

Virtual keypad Daily penetration testing

IP filtering Encryption of all data – at rest and in transit

Encrypted VPN Documented compliance and risk programs

Single Sign On Documented business continuity program

Opening and closing hours


Simple payments equation


Connectivity

Simple Payments

Real-life examples of leveraging cloud technology - Supply Chain Financing- FX Settlements and Exposure Management


Risk & opportunity management

What should we do and why?

A) Go / No Go C) Retain

4) Open

Keep risk openclosely monitorRight way risk &Wrong way risk

5) Mitigate

Natural HedgingDerivativesRisk adjusted rates (+,-) costs

1) Avoid

High riski.e. Liquidity riskConversion riskR / R

B) Transfer

3) Down

Push the risk downyour supply chain

2) Up

Push the risk up to clients and/or customers


“ Corporate treasury is by far the most exciting place to be in finance now and will be for the foreseeable future – the opportunities to add value are endless”

- Todd Yoder, Director Global Corporate Treasury

OPPORTUNITY TECHNOLOGY▪ Identification

▪ Aggregation

▪ Analytics

▪ Impacts

▪ Magnitude

▪ Monitor, reporting, regulation,

▪ Understand and inform what could be before it is

POTENTIAL RESULTS▪ Data

▪ Analytics

▪ Trading

▪ Regulations / compliance

▪ Hedge Accounting

▪ Monitoring / reporting

▪ Capital allocation SCF

▪ Start somewhere

Risk & opportunity management

▪ Informed decision making

▪ More strategic view

▪ Right risk sizing

▪ Better / Smarter Trades

▪ EPS certainty

▪ Compliance

▪ Relationship building I/E

▪ Competitive advantages


Top 5 reasons why cloud technology simplifies and improves your Payment Policy

#5 - Fast implementations and easy updates

Cloud-based software can be implemented and upgraded much faster than previous TMS solutions.

#4 - All-in-one solutions

Cloud-based solutions can support all your payment and connectivity needs. No need to have your Treasury and IT teams managing and supporting multiple solutions. Also, provides full visibility across all activity in one place.

#3 - Scalability to other regions, modules and banking relationships

Cloud-based systems can be rolled out to additional locations as the business expands and its easy to turn on new modules when needed. In addition, you can also be bank agnostic.

#2 - Standardize Payment process and enhance controls

Single process for all payments, approvals, audit reports, etc. This helps you to become 404 compliant and prevent fraud.

#1 - Reduce cost

You can eliminate in-house IT and software cost by replacing old or duplicate systems. In general the cost has come down with SaaS solutions and

TMS are affordable for all clients now.


Additional resources

eBook: The Business Case for a Payment Hub:Centralizing Corporate Payments to Improve Efficiency and Reduce FraudDownload at http://info.kyriba.com/PaymentHub

Related Blog Posts:• Why treasury shouldn’t rely on banks for OFAC screening• Making payments less risky• One size doesn't fit all - tips for designing a global connectivity strategy

http://info.kyriba.com/PaymentHub

http://www.kyriba.com/blog/bob-stark/why-treasury-shouldnt-rely-banks-ofac-screening

http://www.kyriba.com/blog/bob-stark/making-payments-less-risky

http://www.kyriba.com/blog/bob-stark/one-size-doesnt-fit-all-tips-designing-global-connectivity-strategy


Thank you for attending!

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simplifying payments - top 5 reasons why the cloud improves your payment policy

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