Traditionally comprised of rather standard activities, the risks associated with the cash management process have grown exponentially over the years as firms continue to deal in high value transactions. Without the proper technology in place, many are forced to rely on the accuracy of esoteric manual functions, mainly within the wire approval process where a simple mistake can lead firms down a path of lawsuits and hefty fines.
In fact, this risk was brought to light last year when several alternative fund managers received millions of dollars in mistaken payments by a large global investment bank, proving that cash wires are far from a solved problem. Even after attempting to rectify the issue through a series of requests and lawsuits, the money was recently deemed unrecoverable – a very expensive lesson learned.
Now, if the global investment bank at hand had previously harnessed the benefits of automation and technology, the error in question would have been flagged and immediately rectified before distributing large lump sums of money. But unfortunately, risks like the aforementioned continue to arise due to the error-prone and time-consuming nature of functions that have been used over the years that require firms to manually track, map, input and verify banking details for every beneficiary, custodian and intermediary account through paper-based wire management processes.
With the implementation of an automated cash management solution, firms can avoid error and harness several benefits that will lead them to heightened levels of accuracy and efficiency, including:
- Integration with SWIFT so that features such as SWIFT gpi tracker, acknowledgement and message confirmation can be easily used to track and update the status of payments directly within the system.
- Electronic Wire Forms that are built to replace paper-based processes, enabling straight through processing with a full audit trail.
- Communication with banks through SWIFT networks, including additional communication modules for cases of urgent payments or issues that require immediate attention and should be flagged.
- Single Wire to net out multiple payment instructions.
- Validations on overdrafts, crossing currency cut-off dates and available cash balance that provide users with checks and alerts to reduce the back-and-forth communication with banks should a payment fail.
- Enhanced Security with built-in fraud detection and automated notifications using the Office of Foreign Assets Control’s (OFAC) international sanctions list to alert users of payments that should not be made to certain accounts.
By leveraging automation through off-the-shelf technology and services, firms are provided with simple, cost-effective tools, resulting in more robust controls and processes that are specifically designed to handle the high value transactions they deal in on a daily basis.
With automated IVP’s Cash Management solution, managers can avoid the mistakes associated with their manual wire management processes and maintain heightened levels of transparency that will enable them to continue operating with a clear conscience.