For B2B, Vendor Screening As Cash Flow Tool

Compliace

B2B payments are increasingly global and increasingly risky. The key is to know thy vendor and the risks of that vendor, and screening for compliance is at the heart of a new alliance between cloud-based treasury firm Kyriba and financial compliance firm Accuity.

For B2B companies, expansion is a double-edged sword. On one hand, there’s the potential to grow top and bottom lines (a deep desire of, well, any enterprise). On the other hand, expanded supply chains carry expanded risk, as regulations and compliance issues can bring a screeching halt to efficient cash management.

In one recent partnership announced earlier this month, Kyriba, which operates within cloud-based treasury, risk and cash management solutions, has linked up with Accuity, which offers compliance and Know Your Customer technology, to foster a global sanctions screening service.

The two firms said in a release that the overarching aim is to flag issues that can bedevil payments and delay them. That service will be available to all Kyriba clients.

In an interview with PYMNTS, two executives, Florence Vicentini, global head of channel sales and strategic partnerships at Accuity, and Bob Stark, VP of strategy at Kyriba, noted that treasurers and CFOs must grapple with regulatory compliance at the same time that they face increasing risk up and down supply chains — especially as firms expand globally and do business in new (and possibly unfamiliar) countries.

Stark stated that the advantages of a screening system such as the one offered by the two firms are such that executives get advance notice of potential issues that may arise with payments being completed and, in the case of fund flows being flagged and held up — at a bank, for example — the costs can be considerable. As Stark noted, payments can be delayed “for hours to … several days.” Delays along those lines can have far-reaching impact, with CFOs or treasurers spending significant amounts of time tracking and rectifying fund flows that have been held up. The loss of time has an impact that is hard to quantify, and in addition, said Stark, liquidity suffers as well. The screening tools act as buffers for both compliance efforts and fraud prevention, and better payments management improves cash flow.

A few statistics bring to bear just how costly compliance (or, rather, noncompliance) can be. U.S. Treasury Department data shows that, last year, there were as many as 15 enforcement activities that levied fines on corporations in the range of $23,000 to as much as $329 million as they allowed payments to get through to sanctioned parties.

Pre-screening vendors, the executives told PYMNTS, helps avoid sanctions, while technology helps automate compliance efforts, and in what Stark termed “preventative mindsets,” allows treasurers to be ready to deal with payments that are flagged in tandem with sanctions lists. If flagged, said Stark, the treasurer has documentation already in place to provide to the bank (which has been holding up money transfers) in order to satisfy concerns against, for example, UN and EU lists and ensure that payments can be released (and improve cash flow). In one hypothetical, Stark noted that a construction company doing business in an emerging market may face issues getting payments to vendors in a timely manner, and this can brand a firm as a chronically late payer. Said Vicentini, “it’s very hard to know the cost” that can come with damage to a firm’s reputation.