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Finance and Engineering Teams Use Tech to Close Their Communications Gap

To streamline the movement of money, back-office decision making needs to be automated.

Modern Treasury co-founder and CEO Dimitri Dadiomov told Karen Webster in a recent interview that the patchwork nature of banks’ and enterprises’ payment operations infrastructure is hampering the ability to track payment flows — and as a result, companies miss out on opportunities to grow their core operations.

The conversation came against the backdrop where a recent State of Payment Operations survey conducted by Harris Poll revealed 61% of financial decision makers said payment operations take too long from start to finish.

There are challenges embedded in doing business today, regardless of company vertical or size of enterprise, he said.

A tricky balancing act unfolds: CFOs and financial executives need to be able to track and understand how business is progressing on a day-to-day basis. At the same time, they want staffing time and related costs tied to that visibility to be as efficient as possible.

About one-third of all payments involve manual steps,” he said. “And as your company grows, payments become more of an issue,” he told Webster.

Automation helps manage the aforementioned balancing act. But, as Dadiomov explained, there are a few distinct versions of what automation actually entails from a technology perspective. APIs, he said, provide connectivity, and help enable algorithms and other advanced technologies to make decisions. Business automation and logic (those algorithms in the background) are equally critical.

The Other Side of Automation

But there’s another side to automation that may get relatively less attention: getting simple user interfaces in place that modernize workflows so that people can connect within an organization and between businesses — and across far-flung departments and computer systems.

That’s no easy undertaking, as Dadiomov said. Modern Treasury’s own customers tend to have, from a software perspective, as many as half a dozen systems running at any one time.

And a significant amount of communications between departments tends to be “bridged” by manual interactions and communications, he told Webster. Excel spreadsheets, CSV files and bank portals are key examples of the fragmented components that wind up dragging on payment runs.

“Every time you make a ‘jump’ between two pieces of software,” said Dadiomov, “you wind up with an opportunity for something to not ‘sync’ and there’s a mismatch, a dropped payment, a manual error.” Funds are wired to the wrong place, for example, and have to be recovered quickly.

Those friction points can accumulate, and payments wind up becoming a cost center for many companies. Ideally, efficient money movement can be defined in simple terms: If it doesn’t impede financial professionals’ day-to-day work, cash flow is being managed efficiently.

Providers, including Modern Treasury, he said, can connect existing banking infrastructure to client firms’ own back-end systems, through APIs that automate and centralize payment controls and reconciliation.

That level of automation is needed even by companies that are proverbially “far away” from traditional finance. Dadiomov noted that even cryptocurrency companies are dependent on FIs for deposits, withdrawals and access to DDAs.

And for banks and other firms that are bringing new products and services to end users, there’s the ever-burgeoning desire to improve transaction visibility.

He said that finance teams and engineering teams need to work together to make sure that the automation being embraced fosters decisions that are understood and digested by all stakeholders. The finance team, he said, focuses on making sure that funds are available to honor payment obligations; the engineering team is tasked with sharpening UI and workflows.

“When payments are released, move through the bank, and are completed, we have status notifications and visibility into what has actually happened, and everyone knows,” he said.

Looking ahead, Dadiomov said Modern Treasury will continue to build out its operations and will be adding features to its compliance offerings, noting that current macro headwinds are spurring finance executives to scrutinize their own operations a bit more closely.

As he told Webster: “No matter if the stock markets are up or down, payment operations have to keep functioning.”

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