Delays and manual work in the payment chain between ERP systems and payment service providers and banks, slows the recognition of revenue and inhibits an enterprise’s ability to understand its real-time financial status. In today’s economy of tight margins and tighter deadlines, it’s vital for organizations to have automated, real-time insight into the revenue flow of the company across departments and lines of business.
Organizations that rely on manual processes and data capture to consolidate payment data from multiple payment processors and gateways, very often also lack the ability to identify fraudulent transactions until payments have posted. Juniper Research estimated in 2022 that “cumulative merchant losses to online payment fraud globally between 2023 and 2027 will exceed $343 billion.” A reactive fraud mitigation process identifies fraud after money has already changed hands, when companies are much less likely to get it back.
By integrating payment touch-points across the financial landscape and within SAP ERP, companies innovate faster, recoup more revenue, and are less vulnerable to fraud.
The challenges of traditional payment processing and reconciliation.
Most businesses deal with multiple payment processors, each with its own data interface, speed of transaction processing, and processing fees, often making payment processing manually time consuming, error prone and expensive.
Finance professionals working in SAP must manually access, download, upload, and reconcile the data for each transaction from each payment vendor for reconciliation to client accounts and banking ledgers. Extended lead times to fulfil reconciliation requirements also obscures the organization’s true financial status until funds clear suspense accounts and post to the bank or deposit taking institution. This can often translate to delayed customer service and exception resolution.
The manual work of reconciliation aside, non-automated payment processing causes other downstream challenges:
- Complicated and time consuming manual auditing and monitoring of processes to detect anomalies.
- Increased risk of fraud and errors due to reconciliation delays.
- Lack of real-time financial decision making.
These challenges magnify when voids, refunds, chargebacks or other exceptions inevitably occur.
How real-time reconciliation works within SAP.
While SAP provides multiple mechanisms for financial reconciliation, automated solutions exist that can gather, monitor, and reconcile payments from multiple payment processors across multiple self-service touch-points.
EPI-USE ERP Payment Recon:
- Enriches payment data with appropriate metadata from all digital fund accounts for insertion into SAP typical enrichment includes business partner number destination GL account and other posting requirements.
- Reconciles that data from payment channel source, processor events and SAP contract accounts.
- Scans accounts payable and accounts receivable for potential fraud.
- Provides pre-validation capability for Vendor and client onboarding, Account holder verification, TIN/EIN matching and OFAC checks.
- Provides monitoring and actionable dashboards on all integrated revenue touch-points.
ERP Payment Recon connects to payment processors via API to pull payment records and automatically enriches and inserts those transactions into the appropriate destination accounts The software then moves funds across ledgers as they become available. The solution also processes these same ledger transactions for day-end automated closing and reporting in SAP.
While transaction data runs through ERP Payment Recon, the application builds visualizations and analyzes payments for exceptions that need attention. Connections to AWS Fraud Detection and AWS Sagemaker provide enhanced protection via machine learning tools trained on the company’s real transactions.
The role of machine learning in fraud detection.
Static rules engines and software may be able to identify patterns or markers of fraud within transaction data, but in high transactional volume environments, machine learning provides a considerable enhancement to reliably detect fraud at scale.
Amazon Fraud Detector can securely train machine learning models tailored to the context of a specific enterprise. The models continuously learn as fraud is flagged and become more accurately predictive over time. When financial professionals take action on potentially fraudulent transactions, the model will update itself to include that new information.
Using EPI-USE flowmeter, financial professionals can review potentially fraudulent cases alongside exceptions, rather than switching to another platform, and often before the transaction has completed, allowing teams to reduce the number of processed fraudulent transactions, avoiding potential chargebacks and saving the company money in the process.
Benefits of integrating payment processing solutions with ERP systems.
Integrating the company’s payment processing with ERP systems though ERP Payment Recon can benefit enterprises beyond real-time reconciliation.
The tool cuts out thousands of hours of manual work by automatically importing transaction information into ERP, matching that data with the proper accounts, and recording the funds on the correct ledgers as they become available. Financial professionals need only to look at exceptions, not each individual transaction.
Automated control of revenue flow from digital touch-points, through payment processing and directly into ERP becomes a powerful source of truth for data visualizations that show real-time metrics for ledgers, accounts, and payment processors. Fraud detection machine learning models train, analyze, and learn from the centralized transaction flow, raising potentially fraudulent entries on the dashboard alongside suggested actions.
ERP Payment Recon realizes a step change in payment orchestration and financial operations, reducing errors, providing enhanced protection and delivering valuable hours back to financial professionals for deeper planning, analytic and transformation opportunities.
To learn details about ERP Payment Recon and the true value of real-time reconciliation, join EPI-USE for the upcoming webinar, "Streamline and Secure Your Payment Orchestration: Leveraging Technology for Real-Time Reconciliation and Fraud Detection".
Click here to learn more.