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Treasury Management

Desire for Paperless Receivables is Strong

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December 22, 2016

Automating receivables remains priority for vast majority of corporates.

E-commerceMore than two thirds of treasury executives are thinking about taking their receivables paperless, with a plurality estimating that will save their organizations between 11% and 15% of work hours.

Those were among the findings of a survey by TD Bank of 353 treasury executives attending the Association of Financial Professional’s recent annual conference in Orlando, Fla., that also highlighted treasury officials’ increased concerns about cyber security and fraud stemming from electronic payments and invoicing.

In terms of receivables, 69% of respondents reported that they expect their companies to be transitioning soon to paperless receivables and moving the majority of receivables to electronic invoices, with the remainder saying they had no such expectations. Rick Burke, head of corporate products and services at TD Bank, said it was unsurprising that such a high percentage responded to the question in the first-time survey conducted by TD Bank. In fact, he said, 100% of the respondents would probably agree their organizations will make the move at some point.

“But when you start to talk about specific organizations moving, you start to lose a third of the people because they understand the capital investment required to change legacy systems and where their organizations stand today,” Mr. Burke said, noting companies’ typically attach low priority to investing in cost centers such as treasury.

Nevertheless, “the fact that more than two thirds are saying they’re thinking about it says broadly that if companies are thinking about then they probably should be,” Mr. Burke said.

Mr. Burke, who is a member of the Federal Reserve’s Faster Payments Task Force and whose bank is piloting a couple of faster-payment initiatives, said efforts to speed up electronic payments will likely also spur companies to take steps to automate receivables and payables.

Capturing the most votes from survey participants was cyber and fraud security protections (31%), seen as the area in which their companies planned to invest in 2017. That was followed by faster and integrated accounts payables capabilities (26%), investment management and monitoring systems (21%), and self-service and mobile accounts receivables capabilities (20%)

Risk of payments fraud and cyber securitty threats was the area participants cited as posing the greatest challenge in 2017 (34%), followed by an increasingly strict regulatory (30%), the ability to adapt to faster electronic payments and process them (20%), and rising interest rates and economic uncertainty. The survey was given before U.S. elections, the outcome of which likely would have changed some responses.

Just over 30% of respondents said automating electronic receivables would shave work hours by between 11% and 15%, followed by 29% saying between 6% and 10%, and 26 % estimating by 16% or more.

The biggest barrier to adopting paperless receivables, cited by 41.4% of respondents, was that their companies’ current systems were now working fine. Just over 24% said it was too time consuming, while 18% said their companies’ infrastructure was too antiquated.

More than 47% of respondents said it would take between one and two years to make the majority of their receivables paperless, while nearly 20% said between three and four years, and 17% said they’re already paperless. Only 6.5% said they outsource more than 59% of treasury operations to a third party, while 9.4% said they outsource between 26% and 50%, 19.6% between 11% and 25%, and 60% less than 10%.

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