A majority of corporate finance professionals anticipate payments becoming paper-free in no less than three years. However, more than a quarter expect it to take at least five, despite the major benefits they see including the ability to pay in the same day, efficiency, fraud control and security, and cost savings.
TD Bank surveyed 398 finance professionals attending the recent 2017 NACHA Payments Conference in Austin, Texas. More than a quarter (28.3%) said they expect their companies to take five years or more to automate payments, while 19.6% said at least three or four years, and 29.9% one to two years. Only 21.2% said their organizations’ payments are currently paper free.
Rick Burke, head of corporate products and services at TD Bank, said the delay likely reflects corporate finance’s position as a cost center rather than revenue producer. Nevertheless, he noted, virtually all respondents had payment automation on their radar screens.
“People generally see the value of automating, and I think that reflects the understanding that while they may not have the funding this year, they need to automate as soon as possible,” Mr. Burke said.
Speed and same-day payments, a function that NACHA introduced last fall, topped the list of benefits, cited by 26.8%, followed by efficiency (25.3%) and fraud control and security (21.0%), and then cost savings (16.2%) and accuracy (10.6%).
Mr. Burke noted that more than 40% of respondents pointed to efficiency and cost savings, two highly correlated factors that reflect the longstanding trend of corporate treasuries and CFO offices being asked to do more and more strategic work with fewer resources.
“With payment automation, not only can they save money but they can become more efficient, Mr. Burke said.
When asked about the best practices and tools most helpful for getting paid more quickly, lowering department costs or leveraging receivables, same-day ACH easily captured the top slot with just over 40.3%. Accelerated receivables came in second at 26.5%, followed by automating cash application and new electronic payment networks such as Paymode-X and Viewpost.
In terms of the cyber threat to payments, nearly 65% of respondents or one of their clients had experienced a cyber incident, with business email compromise (BEC)(19.9%) and account takeover (19.5) being the most common threats, followed by data breaches (15.0%) and ransomware (10.4%). Respondents were a bit gloomy in terms of controlling the cyber threat, with more than 91% saying cyber will become a bigger threat, up from 89% in last year’s survey.
Indeed, cyber security is a regular issue that NeuGroup members discuss at meetings. This spring, members noted that premiums for dedicated cyber policies have come down in price, although deductibles can be high. They also noted that training employees to spot BEC and other types of cyber attacks is critical.
Mr. Burke said TD Bank requires customers to apply dual controls over the initiation of transactions that move funds out of the bank.
“It’s a bit of a hassle, but we know that it’s a nonintrusive way to make it significantly harder for cyber criminals to effectively gain control of customer accounts,” he said.
He also recommended requiring payments be made from a dedicated computer with enhanced firewalls that is better protected from malware that employees may inadvertently download into the company’s computer network.