For many treasurers, building the business case around real-time payments (RTPs) may seem like a tough call. After all, what treasurer wants to pay money away more swiftly? Delve a little deeper into the topic, however, and the potential use cases become clear.
Insurance companies could, for example, use RTPs to settle claims instantly, or retailers could issue refunds on the spot. In turn, this should help to improve customer service, drive customer retention, and attract new business. Elsewhere, real-time payments can help support a just-in-time manufacturing and delivery model – since funds can be transferred in real-time.
It is not just B2C treasurers who can benefit from RTPs, though. Instant payments will give all corporate treasurers far greater control over their payments than ever before. They will no longer be restricted to old-fashioned cut-off times. Instant payment schemes operate 24/7/365, meaning that corporates can actually hold on to their liquidity for longer – paying only at the last minute.
Real-time payments can also bring value to the collections process, removing risks such as the need for cash handling for those companies who accept payment-on-delivery. And while this may be more of a B2C trend right now, it will likely filter through to the B2B market in due course.
The advent of so-called request-to-pay schemes adds another dimension to the real-time collections angle. These schemes are emerging across the globe and offer a new way to collect from consumers and businesses alike – in real-time. They can be used for ad hoc payments, not just to replace direct debits, and are essentially a next-generation electronic bill presentment and payment (EBPP) solution.
For treasurers, the benefits of request-to-pay solutions (when compared with existing EBPP, card and direct debit schemes) include: lower costs, reduced risk of fraud, and increased information around each transaction. All of which speak to key tactical and strategic objectives within treasury’s ever-growing remit.
So, before you gloss over real-time payments as merely an ‘interesting development’ or one that is not really relevant for your business, it is worth noting that RTPs have hidden depths. What’s more, embracing instant payments could potentially help to optimise processes in all treasury departments – with the right people, processes and technology in place.