In today’s cash- and liquidity-focused business environment, transparency, standardization, and efficiency are paramount. Many organizations are putting heavy emphasis on straight-through processing (STP) of payments and receivables to help boost efficiencies across the supply chain. But how a company defines the scope of the STP process can have a major effect on whether the project reaches its ultimate potential for cost savings and streamlined workflows. The scope definition can impact which department owns the process, and process ownership is an important variable in determining the extent and effectiveness of STP development.
Thinking that STP applies to only transactions, many companies place ownership of the process squarely within the treasury department and limit its scope to payments or receipts. Treasury departments often narrow the scope even further, measuring, for example, the STP of a wire transfer payment—asking whether it went from the company’s office straight through to the ultimate beneficiary. However, I believe that companies need to take a broader, more encompassing approach to STP than merely payment or receipt processing.
The STP Value Proposition
True STP can deliver condensed transaction workflows, minimized settlement times, and reduced operating costs.1 Developing an effective process can be well worth the effort if it delivers these kinds of benefits. Instituting a framework with built-in standards and measures for all of the areas, departments, and processes that comprise an integrated transaction workflow—from the beginning to the end of an executed transaction—can go a long way toward boosting the value of an STP process.
Having the right metrics and standards in place at all the right points of the process can help alleviate order inaccuracies, transaction errors, supply oversights, and payment issues—and, ultimately, can help a company avoid the domino effect of processing “snafus.” Companies should put in place technology solutions for managing the metrics. Examples include streamlined data analytics for each department; electronic dashboards that reflect the current status of every point in the system and provide access to the information by all touch points; and industry templates and benchmark reviews for standard processes such as wires, SWIFT transactions, etc.
Backtracking to identify where errors occurred in the system can be much simpler when a company uses standards that clearly delineate smooth workflows across functions. Data integrity and forecasting accuracy both benefit, as does overall business awareness, which is imperative in global organizations with cross-border communication needs.