A study by the Association of Financial
Professionals (AFP) has found 49 percent of companies are using
paper notebooks or basic computer spreadsheets to perform cash
management, and more than a third still keep track of their various
bank accounts that way, despite the wide availability of electronic
cash management systems.

This reliance on human capital is driven by the means by which
it completes its tasks – primarily through the continued use of
spreadsheets and other manual processes to conduct basic treasury
functions. The study found two-thirds of its organisations have yet
to exploit enabling technologies to streamline operations, implying
that the costs of enabling technologies are impeding

These treasuries are executing large numbers of transactions per
employee. The typical organisation completed 10,000 internal funds
transfers per full-time employee annually, and reconciles an
average of 22 different bank accounts. On an annual basis, the
typical AFP organisation processes 36,500 transactions per
full-time employee.

US treasurers hesitant

Such a situation would seem to cry out for card-based solutions
and electronic payments systems, yet US corporate treasurers have
been reluctant to jump on board for a variety of reasons, including
cost and the learning curve involved for departments already
reporting they are overworked and underemployed.

Financial services providers went back to the drawing board and
now new corporate payments solutions are being launched with an
emphasis on simplicity and ease of use.

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Visa’s newly launched corporate payments solution is a fine
example. The new system allows corporations to make card payments
to more than 10,000 suppliers in 34 different countries, using the
Visa network rather than automated clearing houses (ACHs) and
focusing solely on the payments piece for now instead of adding the
extra step of integrating payers and suppliers.

Bank of America’s recently launched business-business payments
suite – named ePayables – also placed quite a premium on
simplicity. By assembling a number of corporate payments
capabilities in a series of acquisitions, BofA has more capability
than it is currently marketing on the corporate payments side of
the business, but that is just fine with Kevin Phalen, an executive
in BofA’s global product solutions integrated debt and treasury

BofA’s PayMode electronic data interchange (EDI) and corporate
payments exchange reached a significant milestone recently with the
acquisition of the 50,000th vendor. The PayMode network, which
facilitates the electronic exchange of invoices and payments
between businesses and their suppliers, allows BofA’s clients to
pay about 30 percent of their targeted vendors on day one and up to
75 percent within the first 12 weeks, enabling immediate processing
and cost efficiencies.

BofA has long had the ability to manage a client’s payment file,
with a mixture of cheque, wire transfer, ACH, and card
transactions, but Phalen said it is just beginning to see interest
from business customers in electronic invoicing and other advanced
corporate payment features.

Vendors jump on board

To date, the PayMode network, a component of BofA’s electronic
payment services suite, Comprehensive Payables, has processed more
than $225 billion in transactions, and Phalen said new vendors are
being added at the rate of approximately 2,000 per month. Since
April 2007, transactions processed through the network have grown
65 percent and the client base – now more than 425 companies – has
expanded by 64 percent.

Focusing on payments makes sense, Phalen said, because other,
more advanced corporate payments services such as dynamic
resolution and electronic invoicing can follow as they make

“This is kind of a one-piece-at-a-time approach, and we think
that is responsive to what the market is telling us,” he said. “We
are really pleased with the growth of the network, and as the
network grows, it makes it more cost-effective to add things.”

American Express and JPMorgan Chase both deployed similar
strategies, launching corporate payments programmes after each firm
bought payments management service providers. Amex bought Harbor
Payments in December 2006, and JPMorgan Chase bought Xign in May

US Bank’s Access Online Payment Plus, a business-to-business
(B2B) payment network developed in-house and integrated into
existing electronic access systems, is fuelling continued growth
for US Bank’s corporate payments programme.

Networks increase corporate offerings

Payment Plus automates procure-to-pay processes by enabling
organisations to submit payment instructions electronically, in
batches or on-demand. The buyer determines the timing of the
disbursement while maintaining visibility and control from
beginning to end. During the first year Payment Plus was available,
US Bank saw B2B payment growth of approximately 15 percent, and
officials expect that growth rate to at least double this year,
despite the economic downturn.

Citi is taking a different approach, announcing recently it is
using MasterCard’s Payments Gateway service, introduced in October
of last year, as the heart of its Citibank Paylink for Cards, which
it is offering to corporate clients. The service works in
conjunction with a supplier network operated by Ariba. Wells Fargo
said last year it would incorporate the MasterCard Gateway into its
commercial electronic office treasury portal.

Bank of Montreal also chose the Ariba network for a significant
upgrade to its corporate procurement card offerings that expanded
its procurement card division into an overall spend management

Visa’s new corporate payments system, which provides treasurers
with online access to virtual purchasing cards, including
zero-limit and one-time-use accounts, is likely to be welcomed by
more corporate treasurers, who can plainly see that the system
represents an advance over using conventional purchasing cards for
supplier payments without getting lost in the technology.

In tough times like these, corporate treasurers have to compete
with other corporate priorities to justify investing in automated
treasury management applications.