The Federal Reserve Bank of New York works to promote sound and well-functioning financial systems and markets through its provision of industry and payment services, advancement of infrastructure reform in key markets and training and educational support to international institutions.
The Outreach and Education function engages, empowers and educates the Second District communities that the Bank serves, especially civic leaders, students, educators, small business owners, policymakers and the general public. It furthers the Bank's commitment to the region by listening to the communities we serve and leveraging our unique attributes to positively impact school and university programs, as well as analysis and research.
Authors Sandy Krieger and Michele Braun examine the changes that large nonfinancial corporations would most like to see in their payment processes, and find that corporate treasurers and cash managers place the greatest value on improvements that reduce the risk of loss, improve liquidity (access to and use of funds), decrease fees and minimize operating expenses. Business costs for payment services represent a large share of the roughly $300 billion spent annually on payments in the United States.
Krieger and Braun conducted this research to determine why some businesses have not opted for a more automated approach to processing payments, especially with the costs of technology declining. The authors determined which areas were of the highest priority by asking firms to identify processes that are very or critically important as well as those with which they are less than satisfied. The study identified specific process steps and business objectives that treasurers of large corporations would like to see addressed.
In the area of risk reduction, for example, businesses seek to decrease monetary losses associated with debit transactions and to minimize the uncertainty surrounding the timing of payments for cross-border transactions. Improving processing capabilities is also a high corporate priority—for example, posting and matching incoming payments with businesses’ records in a more timely and efficient manner and reducing the complexity of working with bank-specific formats when making and receiving payments. A better understanding of the links between bank fees and services and the management of those fees is also highly desirable.
Sandy Krieger is a senior vice president in the Payments Policy Function; Michele Braun is a financial specialist in the Payments Studies Function of the Research and Statistics Group.