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3 challenges of payment file upload and how to overcome them

by Daniil Saiko | May 16, 2018

File upload can be efficient when making international payments, but it also has its drawbacks. Let’s take a look…

If your business makes multiple international payments, you may be using bank payment file upload. This is a way to import supplier and payment details directly into your company’s banking system and is usually done by exporting a file from your enterprise resource planning (ERP) system or accounting system. File upload has a number of benefits, for example it can reduce the need for manual input, which in turn can mean less chance of keying errors and quicker payment runs.

However, there may also be some challenges to using bank payment file upload as your main long-term way of making cross-border payments. Let’s take a look at three of them: multiple systems and complicated payments architecture, security and fraud, and payment approval process.

Challenge 1: Multiple systems and complicated payments architecture

If your business is well established you may have disparate back office systems and potentially multiple bank systems. For example, you may have a number of overseas offices, yet you initiate all your payments centrally. If you operate in a number of countries using different systems, you can soon be dealing with a complicated payments architecture.

Potential challenges include:

  • Different systems may require different formats for the same file type.
  • Fields within the files need to be mapped to the fields in the banking system/s – it is your responsibility to meet the bank standard, which can be very rigid.
  • If your business holds multiple currency accounts, you may need to upload a different file for each currency. In some cases, file upload can be based not only on currency but also on channel i.e. wire transfer, ACH (Automated Clearing House) or EFT/low value payment.
  • Lack of information on how payments are processed, and no return information for reconciliation.

What to look for: an automated payments system that integrates with your existing software and accepts files in any format.

Challenge 2: Security and fraud

When files are uploaded to a business’ banking system, they are copied from the ERP to a directory. They may stay there for several hours during which time there is the possibility of fraud, both internal and/or external.

Good corporate governance and access controls are required in most jurisdictions. Key questions are asked to work out who needs access to data. The workflow process is made clear so employees know when they are authorised to access files: access is otherwise restricted. Likewise, if a network drive has to be used, access to this drive is restricted to core personnel and there is a clear audit trail of who has accessed each file.

To avoid this situation, businesses use a combination of security techniques, such as:

  • Automation: some companies fully automate the process and only allow files to be stored for a matter of seconds. SWIFTNet is an example of a technology that uses a very high level of automation.
  • Encryption is another way to reduce the risk of fraud. Adding an additional layer of encryption means that at each stage the file is only accessible in an encrypted format. In an ideal world, the file would be written straight onto the FTP site so it doesn’t sit on your company’s local network drive.

What to look for: a combination of anti-fraud techniques and a robust governance process that can help your business for your business.

Challenge 3: payment approval process

Once an invoice has been approved the payment process begins. Within this, the challenges some businesses may come up against include:

  • Approver not having all the information they need to approve the payment.
  • Approver not having the right level of authority to approve.
  • The difficulty of finding two available approvers.
  • Approvers being unable to log in to the system, and/or forgetting their username and password.
  • Convoluted process for setting up new approvers on the system.
  • Simplistic approval model that may not fit your organisational needs and structure.

What to look for: flexibility around payment approvals, whilst maintaining high security.

If you’re considering an automated payments solution for cross-border payments why not talk to Cambridge? Our system is designed to streamline the process for companies that manually process international payments. It integrates with your existing software and the benefits include:

  • accepts any file format
  • payments can be approved anytime, anywhere
  • payments automatically verified before they go out

If you would like to speak with one of our experts about your international payments please contact us using the form below.

For more useful information, download our in-depth guide to managing your cross-border payments.

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