The latest edition of the Federal Reserve Bank of New York's Current Issues in Economics and Finance, Improving Business Payments by Asking What Corporations Really Want, is available.
Authors Sandy Krieger and Michele Braun examine the changes that large nonfinancial corporations would most like to see in their payment processes, and find that corporate treasurers and cash managers place the greatest value on improvements that reduce the risk of loss, improve liquidity (access to and use of funds), decrease fees and minimize operating expenses. Business costs for payment services represent a large share of the roughly $300 billion spent annually on payments in the United States.
Krieger and Braun conducted this research to determine why some businesses have not opted for a more automated approach to processing payments, especially with the costs of technology declining. The authors determined which areas were of the highest priority by asking firms to identify processes that are very or critically important as well as those with which they are less than satisfied. The study identified specific process steps and business objectives that treasurers of large corporations would like to see addressed.
In the area of risk reduction, for example, businesses seek to decrease monetary losses associated with debit transactions and to minimize the uncertainty surrounding the timing of payments for cross-border transactions. Improving processing capabilities is also a high corporate priority—for example, posting and matching incoming payments with businesses’ records in a more timely and efficient manner and reducing the complexity of working with bank-specific formats when making and receiving payments. A better understanding of the links between bank fees and services and the management of those fees is also highly desirable.
Sandy Krieger is a senior vice president in the Payments Policy Function; Michele Braun is a financial specialist in the Payments Studies Function of the Research and Statistics Group.
Improving Business Payments by Asking What Corporations Really Want »