The challenges of implementing an enterprise scale payment hub

With complex global operations, decentralized ways of working across treasury, finance, and accounting, lack of process automation, and security concerns on the rise, you may be considering a payment hub for your enterprise. When juggling multiple priorities and all the operational tasks already stretching your organization, the implementation project may seem dreadful.

It’s not a secret: Setting up a payment hub can be heavy-duty. Depending on the complexity of the case (number of entities enrolled, in which countries you roll it out, how many banks and bank accounts you have, do you connect multiple ERPs, etc), it may take anywhere from several days to several years. Nevertheless, if it’s done right, the payment hub can have significant business impacts – not just in improving ways of working but also in realizing cost savings. 

To explain how to set up a global payment hub on an enterprise scale, we will go through the main challenges, the project team and its setup, ways of working, lessons learned from our customers, and the benefits and business impact after the successful implementation.

Before the start: the challenges you’ll face during a payment hub implementation

All payment hub projects are different. While we have been working on small projects where we only connect one ERP and a few banks, and it only takes days to a few weeks, we have also been delivering large-scale projects for enterprises that could bring even as long as one to two years of commitment. Whenever we undertake a massive project, both parties understand that it’s a long commitment and, therefore, a forward-looking project plan is essential.

The challenges of implementing a payment hub are unique for each organization, but in our example, we will focus on the complex, enterprise-scale implementations where clients were dedicated to creating a payment factory within their organization. Keep reading even if you are implementing a less complicated solution, as the article gives some great insights for planning any payment hub implementation.

1. Global operations make the implementation complex

Many Nomentia clients have undertaken massive payment hub projects with operations in over 100 countries. Even just operating in tens of countries has its challenges. If you must implement the payment solution in countries with strict legislation – like China or India – having a good implementation partner with experience is an advantage. 

Why do global operations make the implementation complicated? One reason is integrating ERPs, financial systems, and banks. The other reason is more abstract: people generally don’t like change.

It’s not unusual for local entities to have their own operational procedures – the process can also often be highly manual, if not entirely. In some cases, an integration between the internal system and the bank, like an ERP, may exist to execute payments automatically. Still, on a group level, you may have very little visibility on this. In addition to having localized operational procedures and local systems, each country and entity may have its own banking partner. Later on, we will discuss how working with many banks can complicate the implementation.

Moving away from the current ways of working comes as a big shock for many – even though you are trying to implement improvements that can benefit everyone. If you want to implement an immediately successful project, you must involve all necessary stakeholders in managing the change and getting the essential project-planning information.

2. Scattered system landscape

Based on our first challenge, you may have already guessed the next one: A scattered system landscape can make the implementation project complex. If you have acquired new units from different regions, it’s possible that instead of running the business on one central ERP system, you have several ones used locally. Payment files may also be generated in other systems. If system consolidation is not currently possible, you should at least connect all source systems to the selected payment hub, allowing the payment files to be automatically forwarded to the correct bank. 

Having a scattered system landscape naturally poses a few challenges:

- Integrating the ERP system: This part of the project can be tricky as it depends on good documentation and tech specs, such as the connection endpoint or the file formats. The more ERP systems you use across the organization, the more time you need to schedule to set up the integrations. 

- Master data management is crucial to the project – prepare the master data files well ahead and do as much end-to-end testing as possible. The more ERPs you have, the more time you will spend on master data management and data integrity.

- Data mapping is equally important as the ERP integration – if you have more than one in-house data format, but your different systems generate payment files in various formats, you must spend time mapping data to the bank-specific formats.

3. Preparing guidelines & change management: Communication is as important as the technical setup

In an enterprise-scale project where tens of entities are involved, having good change management practices, ways of communication, and clear guidelines will set you up for success.

Involve your teams

The new payment hub will impact how hundreds of people work daily – at worst, moving from manual processes or local ways of working to a centralized, automated approach could be something people may even fear or be concerned about.

Communicating how your operations will change positively when you introduce the new processes will help people perform their jobs well and make them feel involved in the project from day one. Your colleagues can also be great allies when you need to understand how to work with different banks globally.

Choose the project team and include people with different backgrounds

Choosing your team is the most essential part of the project! You don’t need a big team, but you should include people who understand your financial processes, how they work now, and how they should work when you automate them.

Also, involve an excellent project manager to communicate with the payment hub provider, keep the project on track, and hold people accountable for the progress.

Having one or two IT resources can also be helpful throughout the project. As you will deal with integrations – although the payment hub vendor usually takes care of most of the integration work – your IT team members will still need to help the vendor, participate in the end-to-end testing process, and handle master data management, and provide all the necessary technical details.

Set up clear ways of working

It’s also a good idea to clearly outline the ways of working for your project team. Identify the core team, the communication channels for sending each other instant messages and following the progress, your meeting cadence, and where you will share information with the larger group.

 4. Connecting with the banks

‘Not all banks are the same’ – this is some of the best advice for when you start a payment hub project. Before you even begin, you must have a list of the banks you will need to connect, and your local employees should be able to help point out the unique challenges with each (e.g. if the bank would not accept standard payment file formats and you would need to convert the file your ERP generates).

The list will also help you identify the best ways to connect with the banks – whether you create direct connections, use SWIFT, or there are specific local connection requirements. 

In your implementation plan, schedule plenty of time for setting up the bank connections. It is usually more challenging than creating connections with ERPs – in the case of the ERP, your IT team can control the pace. With banks, many factors are out of your hands, and sometimes, all you can do is wait or comply with the requests from the bank.

5. Time management is essential

It’s tempting to create a very tight project timeline. In a recent survey, our client said smart time management positively impacted their implementation project.

‘Be wise and flexible – you can avoid delays in the projects, and you will have the flexibility to realize quick wins during the project, like adding different types of payments.’

Of course, delivering the project as soon as possible is still a priority – but leave room for surprises (e.g., when you deal with longer timelines than expected with the banks) and time for experimenting – maybe you will be able to realize a few unexpected features during the implementation project. Solution consultants from vendors will normally guide you almost effortlessly when you can implement a feature, even if you haven’t planned it before.

The business impacts of setting up a payment hub

Companies come to us with different reasons why they would like to implement a payment factory. A very common theme is automation – in some cases, we are taking the client from 100% manual processes to almost 100% automation. (You can’t always avoid manual payments, but it’s still possible to process them through the payment factory, and that’s what manual payment templates are for.)

In many cases, having more control over outgoing payment processes is the main priority. The group wants more control over all payments, and centralization is the theme we need to focus on. The opposite can also be true, though: In one case, our client wanted to implement a payment factory but without the centralization. They wanted to use one tool for all of their entities but still allow them some freedom in executing their payments.

Another emerging theme is, of course, security and compliance. As fraud increases, CISOs/CIOs often push the treasury department to implement a payment factory. Thus, most major providers offer two capabilities vital for the CISO office: fraud detection (often utilizing AI or a rule-based engine) and audit trails for every transaction.

Regardless of your priorities, you will most likely realize some of the following business impacts:

1. Payment process standardization

Even if you are not going for a centralized approach, you will have a tool all global users can use to execute payments. If your goal is centralization, having a payment hub between your banks and systems will standardize the process and improve productivity in all units.

2. IT Integration

A scattered system landscape can become expensive for an enterprise. By integrating all ERP systems and financial software into the payment hub, you can achieve complete automation: The payment hub can fetch payment files from the different systems and send them to the correct bank. Depending on the size of the project, clients have reported that integrating all their IT systems where payment files are located can result in hundreds of thousands of savings. 

3. Closing bank accounts

Managing bank accounts takes time and effort. As a positive outcome, most of our clients are closing bank accounts and, thus, realizing savings from tens of thousands to over one hundred thousand euros. 

4. Payment compliance

A standardized way of working equals compliance. Adding audit trails, security measures like MFA, and the six-eyes principle are just the basics. Forward-thinking teams are investing in automated fraud detection and erroneous payment prevention to reduce the chances of payment fraud and errors that have increased over the last few years.

5. Work efficiency

While reducing the number of FTEs should not be the project's ultimate goal, at least you won't be hiring people to do mundane manual tasks, and your workforce can focus on more critical projects, like forecasting future cash flows. This will also transform the role of your department within the organization. You will be able to take the department from an operational role to that of a strategic advisor if that's your priority.

Two more essential ingredients to a payment hub implementation: a dedicated project team and a dedicated supplier

Implementing a payment hub on a global scale in tens of countries for tens of subsidiaries and hundreds of users is a large undertaking. It will require excellent project and time management and an exceptionally dedicated team. Establish a common goal initially, and make sure everyone knows their role and why the project matters. Also, for the implementation to succeed, you must choose the right supplier. The payment hub supplier should provide a payment hub with all the functionalities you need to manage your payments. Still, in addition, they should be able to support you with IT integration, bank connections, project management, and communication. Working with a payment hub provider that fits your team well is very important because you will spend a lot of time together in weekly meetings. Choosing the best partner may involve more than just finding the best technology.

Next steps: Is the implementation of a payment hub just the start of a bigger change?

The best approach ultimately depends on your organization and requirements. Some clients start with creating a payment factory, knowing they will continue the project and create an in-house bank and moving away from working with hundreds or thousands of bank accounts, using internal accounts instead, implementing a POBO and COBO approach, and even managing intercompany loans in an in-house bank.

Some may want to implement something other than an in-house bank, and they can manage their cash flows very well with just a payment factory and add liquidity management to complement the service and forecast your company's cash balances based on accurate data from the payment hub.

Whatever your approach is, setting up a payment hub can be a significant change for the better if you are not yet automating your payments on a global scale.