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Technology emerges as macroeconomic management tool for 2024

Tue, 5th Dec 2023

Gazing into the crystal ball for 2024, CFOs are likely to expect economic uncertainty in 2024 due to continued high-interest rates and inflation. Though these factors are beyond their control, they ought to focus on controlling what they can. And the right technology can provide that element of control by offering them connectivity and helping them pay and get paid with accuracy, efficiency, and security. Here are four payment and technology trends for the office of finance to watch for in 2024.

Analogue falling; digital rising: Moving away from manual payment processes and spreadsheets to track payments will continue. In fact, if we have this conversation a year down the road, automated payment processes and platforms will be table stakes for most companies. Once companies have made the automation shift, their CFOs can focus on getting more value out of those solutions than merely the control, speed and efficiency most frequently associated with them. A good example can be seen in the underrated ability of accounts payable (AP) and accounts receivable (AR) automation solutions to complement cash flow management. One of the key benefits of AP automation is the enhanced visibility it provides into cash flow. With real-time data and analytics, businesses can gain a comprehensive understanding of their cash flow position at any given time. This visibility allows for better financial planning and decision-making, as organisations can proactively manage cash flow gaps and surpluses. By having a clear picture of incoming and outgoing cash, businesses can really optimise their cash flow and use cash as an asset.

Payments data becomes mission critical: No one will tell a CFO they don't have enough data. They have plenty. But do they have the right data? Are their payment systems generating relevant, complete, and actionable data? Because some of the data that can be gleaned from cash flow and treasury management solutions can improve financial management, optimise cash flow and inform strategic decisions. For example, data on vendor performance, such as delivery times, quality of goods or services, and compliance with contracts, can be extracted. Similarly, customer data such as purchase volumes, frequency, and preferences can be analysed for better customer relationship management. Adding visibility across the AP, AR, and treasury spectrum should be the first step toward accessing and utilising that data in the most effective way. 

AI focus on machine learning to protect and forecast: I expect to see machine learning leapfrog rules-based algorithms in business payments in 2024. Rules-based analytics, as the name implies, relies on predefined rules and thresholds to analyse and act on transaction data. Let's say that your instructions for Company X state that any transactions exceeding $10,000 should be marked as suspicious. While this rule may produce consistent alerts, it may not be flexible enough to accommodate the company's growth and payment patterns. By using machine learning, algorithms can identify patterns in data instead of relying on rigid rules. The "machine" learns from historical data to make predictions or decisions rather than being explicitly programmed to perform a task. As more transaction data is fed into the system, the model refines its predictions, potentially improving accuracy over time. Therefore, if Company X's revenue and average transaction values increase, the ML algorithm can incorporate this new data and suggest raising the threshold for fraudulent alerts.

Payment and cash platforms to simplify multi-bank relationships We're likely to see continued growth in multi-bank relationships for corporates of all sizes – driven by how companies benefit from different bank products, services and rates, as well as continuity plans and the need for international coverage. Deloitte recently reported that more than 33% of large enterprises have ten or more banking relationships. But just because a company has multiple banking relationships doesn't mean they can truly manage all of them. The only way to effectively manage across banks is to have a cash and payment solution that allows all accounts to be seen and managed in one platform. CFOs need real-time insights into available funds and liquidity for their accounts, deposits, debts, and investment accounts across all their bank relationships. To achieve this level of cash visibility, CFOs need systems that provide the tools, integrations, and analytics to facilitate the management of day-to-day operations and respond swiftly to financial challenges. 

From an AP and AR automation perspective, a CFO should connect to a business payment platform that accommodates and streamlines any complexity. Transforming business payments means connecting the dots between a company's teams, their ERP and internal systems, across their bank accounts, and payment networks, offering the office of the CFO a highly configurable solution to automate, control and protect payments in and out of the business. And all that can be done within one business payments platform. 

Beware of insider fraud: A tougher financial climate, changing technology and remote working will continue to contribute to increased levels of financial crime and insider fraud next year. Here's why. In the 1970s, criminologist Donald R. Cressey published a model called the "fraud triangle," which outlines the three conditions that lead to higher instances of insider fraud: motivation, opportunity, and rationalisation. Add a cup of economic pressure and a tablespoon of working from home, and you have a perfect storm for insider fraud. Insider threats must be countered with technology to monitor employees' interactions with core payment systems and privileged data usage. Such frauds also need case management solutions to help financial institutions identify, organise, prioritise and manage insider threats from across the organisation in one system. 

So, these are four payment trends and one big security trend to watch in 2024. In a world where the "pay and get paid" equation is more important than ever, employing the best technology to help manage economic uncertainty should be job one for the CFO next year.  

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