Electronic Payments in the US: An Interview with Craig Jeffery
Navigating the intricacies of electronic payments, especially in the vast and complex landscape of the United States, can often be overwhelming. Expert insights and guidance are essential to help us understand this dynamic realm. This is why we’ve invited a specialist to lead the way, Craig Jeffery, who stands at the forefront of the treasury field.
Craig Jeffery is the mastermind behind Strategic Treasurer, a firm he founded in 2004 that has since become a beacon of advisory services and global research within the treasury landscape. The impact of this firm is far-reaching, carving out innovative pathways in the complex world of treasury management.
Additionally, Craig Jeffery is the voice behind CTM File, a dedicated platform that broadcasts treasury news to keep professionals up-to-date with the latest happenings. He has been instrumental in creating and managing two informative podcasts: The Strategic Treasurer and the Treasury Update. These platforms cater to treasury professionals, bringing valuable insights and updates to their fingertips.
This article delves into a fascinating conversation with Craig Jeffery himself. We explore the world of electronic payments in the US, touch upon his work with Strategic Treasurer, and get an insider view of his treasury-focused podcasts.
By reading this article, you can expect to learn
- What Is the Payment Landscape in the US?
- What A Payment Trail Is
- The Different Types of Electronic Payments in The United States
- What Are Its Journeys from The Bank Account of The Payer Up Until the Receiver’s Bank Account
- The Type of Research Strategic Treasurer Does
- And Much More.
Join us on this journey as we uncover the vast landscape of electronic payments under the expert guidance of Craig Jeffery. Let’s get started and unravel the intriguing world of treasury management.
Types Of Payments Landscape Found in The Us, And What’s Unique About Them?
Craig Jeffery explains that In the United States, payment systems are diverse, ranging from traditional Cheque-based transactions to sophisticated electronic payments. We can broadly classify these systems based on their user group or the nature of transactions involved.
Payments for Individuals or Consumer-Based Payments
These include methods consumers commonly use for daily transactions, which have evolved. Cheques, while being an age-old payment method, still hold significance in the US payment landscape. Many might wonder why a tech-savvy nation like the US still uses cheques. The reason is the digital transformation cheques have undergone – starting as paper but ending up in digital form at the originating bank.
Another low-value payment popular among consumers is card payments, which encompass credit and debit cards. Electronic fund transfers, known as Automated Clearing House (ACH) payments, are also prevalent. These start as digital transfers, offering a convenient and efficient way to move money.
Furthermore, consumer payment services like PayPal and Zelle have gained massive popularity. These platforms facilitate instant money transfers between family and friends, thus making personal transactions effortless. Digital wallets stored on smartphones also fall under this category, contributing to the ease and speed of transactions.
Payments for Businesses
Regarding corporate payments, the main methods are cheques, cards, and low-value and high-value payments. Each of these methods has unique characteristics catering to specific business needs.
Cards in a corporate context come with several variations, like purchasing cards, virtual cards, and ghost cards, each designed to streamline business transactions and maintain financial control.
High-value transactions often rely on wire transfers, which provide a secure and immediate transfer of funds between different financial institutions.
In recent years, the push towards faster payment methods has led to the advent of services like real-time payments and FedNow. These options are paving the way for quicker and more efficient business transactions.
The US payment landscape is vast and varied, blending traditional and modern methods. This diversity caters to the broad needs of consumers and businesses alike, with continuous innovations making transactions faster, safer, and more convenient.
Why Do People in The US Continue Using cheques, Even If They’re Dematerialized at Certain Points in The Payment Process?
Craig Jeffery, an expert in the field of treasury, offers some intriguing insights into why cheques are still widely used in the US, despite the advancements in digital payment methods.
The transition from Paper to Digital
According to Jeffery, back in the early 2000s, the processing of cheques involved physically moving paper from one point to another. When you wrote a Cheque, it would be deposited at the recipient’s bank and then physically moved to your bank for clearance. Like Jeffery, those who remember this era would receive their processed cheques back in the mail at the end of each month.
However, the dawn of the new millennium brought changes. With the Check 21 Act and the advancement of image processing technology, the Cheque payment process transformed from a physical movement of paper to a digital data transfer. When a Cheque is received today, an image of it is taken, either at a bank lockbox or a mobile phone. This digital image then travels through the payment system, thus dematerializing the physical Cheque into a digital format as quickly as possible.
Efficiency and Convenience
Despite the digital revolution, cheques persisted because of the efficiency developed around their handling. Jeffery reminisces about the speed of Cheque processing, comparing it to “paper about to burst into flames.” These highly efficient systems were developed over years of practice and technological advancements.
Moreover, the habit of using cheques has been hard to shake off for many. The convenience of issuing cheques due to established systems has also played a role in their continuing usage.
The Move Towards Less Cheque Usage
The COVID-19 pandemic has acted as a catalyst to reduce Cheque usage. The challenges presented by the pandemic—difficulty printing and mailing cheques and the issue of receiving them—have nudged more people towards electronic payments. This shift is expected to continue, leading to an era of fewer cheques.
Jeffery admits to seldom writing cheques and expects this trend to continue, particularly among the younger generation. While cheques may not disappear completely in the immediate future, the trend is clear: the era of digital payments is accelerating.
What are Low-Value and High-Value Payments and their Differences?
Craig Jeffery clarifies the meaning and differences between low-value and high-value payments.
Understanding High-Value and Low-Value Payments
When discussing money transfers, we often refer to two types: high-value and low-value payments. The meaning can change depending on the country or region, but Jeffery offers a more universal understanding.
High-value payments, often called wire transfers in the US, are typically large sums of money. These payments are always revocable, meaning they can be cancelled if needed. They’re also usually settled through a central bank system, which ensures their safety and reliability. However, because they’re big amounts of money, they tend to be fewer in number.
On the other hand, low-value payments are smaller sums of money, but they occur more often. In the US, people usually consider direct deposit payments (like your salary) or utility debits as low-value payments. These are often done through the US Automated Clearing House (ACH) system.
The choice between using a high-value or low-value payment system depends on factors like the size of the transaction, its urgency, and whether the ability to revoke (cancel) the payment is necessary.
Differences in Names and Limitations
The terms used to describe these types of payments can differ depending on where you are. For instance, in the SWIFT system, these payments might be referred to as ‘urgent’ and ‘non-urgent.’ In the US, you’re more likely to hear ‘wire’ and ‘ACH.’
Also, it’s crucial to note that there are limitations on lower-value payment systems. For example, in the US, an ACH payment can only go up to one cent less than $100 million. You’ll have to split it into multiple transactions if you need to send more than that. This limit isn’t because of a regulatory cap but due to the technical limitations of the number field in the ACH system. In contrast, wire transfers, which are high-value payments, don’t have this limit. Other lower-value payment systems may have other restrictions, often capping at a million or half a million.
So, while there’s no strict dollar amount defining high-value and low-value payments, the type of payment, its urgency, size, and revocability are the primary factors distinguishing the two.
Pros, Cons, and Use Cases of Different Payment Systems in Corporate Treasury
Understanding the nuances of various payment systems can be a game-changer in the corporate world. Craig Jeffery sheds light on how corporate treasurers can make the most out of different payment methods, explains what Automated Clearing House (ACH) is, and breaks down the term ‘payment rails’.
High-Value and Low-Value Payments in Corporate Treasury
Historically, corporate treasury has used wire transfers (high-value payments) and ACH (low-value payments).
Being irrevocable and ensured as good funds, wire transfers are typically used for large transactions that must not be reversed. Examples of this might include real estate closings or business acquisitions. They’re a bit pricier and faster, but they ensure that the payment cannot be reversed through the system.
ACH payments, on the other hand, are less expensive and are used for regular transactions. Additionally, cards, especially purchasing or virtual cards, are increasingly used for handling Accounts Payable (AP) activities.
What is ACH?
You might wonder what ACH stands for. It stands for Automated Clearing House. Simply put, it’s a system that manages the movement of money from one bank account to another.
The Federal Reserve, or the Fed, acts as a clearing for these payments in the US. It’s like a hub where banks send payments distributed to their respective destinations.
Demystifying Payment Rails
Another term you might often hear in finance is ‘payment rails’. This phrase is a metaphor for how digital transactions are made. Just like trains run on rails, transactions use different ‘rails’ or channels to move from one account to another.
For instance, the Fedwire system or chips might be used for settling wire payments, while the Automated Clearing House rail would be used for low-value payments like ACH. Card networks would be the ‘rails’ for card payments.
Common Payment Rails in the US
Individually, the most popular payment rails are card networks and ACH rails. For personal payments, many people use Zelle, PayPal, or Venmo, which are popular social transfer applications.
In the corporate treasury, however, different payment rails may be preferred depending on various factors such as the size of the transaction, its urgency, and the need for revocability. Understanding each system’s pros, cons, and appropriate use cases can help treasurers choose the most efficient method for each transaction.
Preferred Payment Methods in Corporate Treasury
The conversation around payment methods in corporate treasury becomes more nuanced as Craig Jeffery shares his insights. He discusses popular corporate payment methods, the distinction between urgent and non-urgent payments, and the state of blockchain technology in the corporate payment landscape.
The Top Contenders in Corporate Payments
According to Jeffery, on the corporate side, Automated Clearing House (ACH) payments are top, with cheques trailing closely behind. Despite their vintage nature, cheques remain entrenched in many companies’ payment processes. Wire transfers, although reserved for larger payments due to their higher costs, maintain their importance but rank lower in volume compared to ACH and cheques.
In addition to these traditional methods, he mentions that certain types of card transactions, such as virtual cards and purchasing cards, hold a significant role. These special-purpose cards cater to specific sectors of the economy and are increasingly becoming a part of the corporate payments mix.
Jeffery also highlights some companies’ use of Real-Time Payment (RTP) and same-day ACH for specific needs. For instance, insurance companies may opt for these faster methods, or if a company needs to process payroll in a rush, same-day ACH or RTP could be useful. However, these methods are still small in volume and value compared to other established methods.
Urgent Vs. Non-Urgent Payments: Value Doesn’t Always Matter
Jeffery provides clarity on the often confusing topic of urgent versus non-urgent payments. Contrary to what some might think, a high-value payment isn’t always urgent, nor is a low-value payment always non-urgent.
As he points out, the urgency of payment is less about its value and more about the speed it needs to be delivered. Therefore, terms like “urgent” and “non-urgent” are usually tied to the speed of delivery associated with certain payment methods—such as wire transfers (typically considered urgent) and ACH payments (typically considered non-urgent)—rather than the value of the payments themselves.
Blockchain in Corporate Payments: Not Quite There Yet
In discussing the role of blockchain in corporate payments, Jeffery shares that while some supply chain vendors use elements of blockchain, it’s not widely adopted for settlement purposes in the corporate treasury world. While blockchain certainly has potential, its integration into mainstream corporate payment processes may still be far off. Jeffery’s insights hint at a future where blockchain might play a more central role, but it remains on the fringes for now.
Unravelling the Mystery of Blockchain in Payments: Insights from Craig Jeffery
The buzz around blockchain technology, its potential, and its limitations in revolutionizing payments is the core of the next part of the conversation. Craig Jeffery shares why blockchain hasn’t stormed the world of payments as expected and the niche areas where it is starting to gain traction.
RTP stands for Real-Time Payments. This system represents a faster payment scheme managed by The Clearing House (TCH), offering an efficient method for businesses to transfer funds quickly.
Why hasn’t Blockchain Transformed Payments Yet?
While blockchain technology has been a hot topic for some time, it has not caused the massive shift in payments that many predicted. According to Jeffery, much attention has been directed towards the newer, faster payment methods that usually involve lower-value transactions, like Real-Time Payment (RTP) and same-day Automated Clearing House (ACH).
The benefits of these faster payment methods are compelling. For instance, RTP has limits that reach up to a million dollars, and same-day ACH allows efficient batch processing of payments. These systems offer several windows within a day for faster fund availability, making them an attractive option for businesses.
As Jeffery explains, blockchain technology is not necessarily opposed or disliked; its adoption is still in the early stages. It’s not that businesses are against the idea, but the technology itself and its uses need to evolve.
The Potential of Blockchain: Trade Finance and Distributed Ledgers
While blockchain hasn’t seen widespread adoption in general corporate treasury practices, Jeffery does point out a specific area where it is starting to prove beneficial: trade finance.
The concept of distributed ledgers, a key feature of blockchain technology, is valuable in trade finance due to its ability to maintain a transparent, consistent, and verifiable record of transactions. This makes it an excellent tool for handling documentary collections or for ensuring that all parties involved in the trade have the correct, matching information.
Moving away from traditional banking systems and paper processes and towards a digital management system is appealing, but replacing older, slower methods with newer, more efficient ones takes time.
Unveiling the Journey of Electronic Payments
The mystery of electronic payment and how it works often baffles people. One moment you’re sending money and the next, it’s received. Craig Jeffery takes us on an enlightening journey to uncover the various steps of electronic payment, a concept that often seems as simple as clicking a button.
The Core of an Electronic Payment
In its simplest form, electronic payment is a value transfer instruction that starts and ends electronically. That means it’s entirely digital, with no physical aspect involved. You send an instruction, and depending on the payment type, its journey or “rail” can pass through different places, networks, or clearing houses before the value is transferred into someone’s account.
This journey might seem like magic to an average person, but it’s very much like how phone systems operate, passing through a network of switches and protocols.
The Steps Involved in Electronic Payments
To break it down, let’s consider an example of an Automated Clearing House (ACH) payment within the US from one company to another. Here are the key steps involved:
- You send the payment to your bank, the originating depository financial institution.
- Your bank is a member of the ACH network and forwards the payment to the Federal Reserve, the central bank system, via NACHA (National Automated Clearing House Association).
- The transfer moves over and settles in the banks’ Federal Reserve accounts.
- The receiving depository financial institution, the bank of the company you’re paying, posts the payment into the recipient’s account.
While this might seem complex, from the perspective of the person or company receiving the payment, they only see that they’ve received the funds.
The Complications of Separate Networks
Adding to the complexity, the US operates separate networks for handling different types of payments. For example, there are two networks for wire transfers, the Federal Reserve Wire Network (FedWire) and the Clearing House Interbank Payments System (CHIPS), a privately owned network.
The same applies to the ACH system, where payments can be processed through the Federal Reserve-owned ACH network or the privately owned Clearing House.
The bank usually chooses which network to use unless they provide the option for their customers to specify. This is one of the reasons why the process of electronic payments might feel like a big, cloudy mystery to the everyday user.
To simplify, imagine electronic payments like a trip through a large cloud with various stops and protocols. But once you understand the process, the cloud becomes less daunting and the journey more enlightening.
Deciphering ACH and Wire Transfers: Dual Systems Explained
Understanding the multiple options available for settling payments might seem complicated. But Craig Jeffery clears the air around two options – ACH (Automated Clearing House) and wire transfers, which have dual systems, each owned by different entities.
ACH and Wire Transfers: Two Options for Each
ACH payments and wire transfers each have two alternatives.
- ACH payments: You can use the ACH network, which operates through the Federal Reserve system, or the clearing house, which the banks privately own. Both networks follow similar rules and formats.
- Wire transfers: Like ACH payments, you can opt for the Fed wire system or the privately owned CHIPS network.
A Peek into Historical Payment Settlement
Even cheques could settle either by presenting them to the Federal Reserve or using the clearing house. Craig recounts an incident from the 9/11 terrorist attacks when planes couldn’t fly. This meant that cheques couldn’t physically be delivered for settlement, so they all ended up at the Federal Reserve. Despite the logistical issues, the Federal Reserve had to honour its promise to clear the cheques.
Why are There Secondary Systems?
It might be tempting to think that the banks could handle everything without needing the Federal Reserve. But, having a secondary system, like the clearing house owned by the banks themselves, can be more efficient and quicker.
The Federal Reserve provides services for all banks, big or small. But, the larger banks, which clear many ACH transactions among themselves, may find it cheaper to create their network. They thus establish private settlement methods, like the clearing house, to cut costs and increase efficiency.
To sum it up, the dual systems for ACH payments and wire transfers exist not only as a failsafe mechanism but also as a cost-effective alternative for large banks to expedite payment transactions among themselves.
Clearing Houses: A Necessity for Efficient Financial Transactions
Wondering why clearing houses are in the picture when one bank could directly transfer money to another? Craig Jeffery shares why these intermediaries exist and how they are crucial in efficient financial transactions.
Why Do We Need Clearing Houses?
At first glance, you might think one bank can send money to another. But consider this: Banks don’t send physical goods or actual money. They send instructions that change what each bank owes to each other.
Banks can have individual balances with each other and make changes based on these balances. But that would mean every bank has to maintain a balance with every other bank it does business with. Can you imagine the number of accounts they would need?
Instead, most banks have accounts with the Federal Reserve. It becomes easier to manage balances at the Federal Reserve than maintain balances at every other bank.
Picture it like this: Imagine if every bank had an account at every other bank. Each bank would then hold money at the other bank. When they want to transfer money, they could move it from their account at the other bank to the receiver’s account.
But imagine having multiple accounts at multiple banks and constantly moving money between these accounts. Doesn’t it sound like a complicated, time-consuming task?
Here’s where clearing houses step in:
Instead of having individual balances with every bank, the banks have accounts with the Federal Reserve (or with a clearing house). This way, they can easily manage their balances and transactions, which improves efficiency.
So, clearinghouses handle these operations rather than banks managing multiple accounts and numerous transactions. It’s similar to the concept of direct phone calls. If it’s just between two people, a direct line works. But when you add more people, having a central system that handles all the connections becomes more efficient.
To conclude, clearinghouses act as a central hub, providing an efficient way to manage, net, and settle activities among various banks. They are not just intermediaries but essential components in the smooth functioning of financial transactions.
The Role of SWIFT in Global Financial Communication
You might be wondering where SWIFT (Society for Worldwide Interbank Financial Telecommunication) fits into the whole picture of financial transactions. Craig Jeffery gives us an insider’s view of how this global messaging network aids banks and corporations.
What is SWIFT’s Position in Financial Communication?
Swift is a standard-setting entity for financial formats and a global messaging network. It is not directly involved in the settlement of money. But, it is responsible for delivering all the instructions for settling money. To put it simply, SWIFT is the messenger in the financial world.
SWIFT: A Standard Setter and Messenger
SWIFT serves two main roles:
- It sets standards for formats used in financial communication.
- It supports a vast network for sending and receiving messages.
SWIFT’s messaging system offers a feature called non-repudiation. With this, banks and corporations can’t deny sending a message. This feature strengthens the integrity of financial transactions.
How Does SWIFT Work?
Say you want to move money from one place to another. You’ll send instructions via SWIFT to your bank. These instructions will then inform your bank how to execute the transfer. For instance, the bank may move the money via Fedwire in the US or CHAPS in the UK.
So while the actual execution happens on different payment rails, the messaging network that carries these instructions is often SWIFT.
SWIFT and Sanctions
Let’s understand the importance of SWIFT with a practical scenario. If a country faces sanctions and gets cut out of SWIFT , it can’t send messages anymore. It does not stop the actual monetary settlement but hinders communication about these settlements. This shows how SWIFT is essential for moving money and facilitating communication between banks on a global scale.
SWIFT is like the postal service of the financial world, ensuring that all messages (instructions) reach their destination correctly. While it doesn’t handle actual money, its role is vital for smooth, reliable, and secure financial transactions.
Decoding ACH Transfers: Processing Time, Costs, and Limitations
ACH transfers are an essential tool for moving money across accounts. But you might be curious about the nitty-gritty details of ACH transfers, such as processing times, costs, and transaction limits. Craig Jeffery gives us valuable insights into these aspects.
How Cost-Effective are ACH Transfers?
ACH transfers are quite inexpensive. An ACH transfer might cost between 10 to 25 cents for moderate volumes. With high-volume activity, the cost per transfer can go even below a dime. ACH is a more budget-friendly choice compared to other methods like wire transfers.
What is the Processing Time for an ACH Transfer?
ACH operates as a batch system. Normally, ACH transfers take a day to process. So, if you initiate a transfer now, the settlement date (the day the funds move) will be the next banking day or later.
However, since 2016, Same Day ACH has allowed for quicker processing within specific windows. While these ‘speedy cycles’ cost a bit more, they ensure your money reaches its destination on the same day.
How Much Money can you Transfer via ACH?
A single ACH transaction can handle just below a hundred million dollars. However, due to speed and fraud concerns, the Same Day ACH has a cap limit of 1 million dollars.
ACH Transfers Vs. Wire Transfers
There are a few key differences between ACH and wire transfers. One is the revocable nature of ACH transfers. If there’s an error or fraud, there’s a limited time window within which you can revoke the transaction. However, once the money is sent for wire transfers, it’s irrevocable. You’d have to take a legal route to get it back.
Also, wire transfers are more expensive than ACH transfers, often ranging between 10 to 25 dollars. However, once approved, wire transfers are almost immediate.
Time Window for Revoking an ACH Transfer
For ACH transfers, the revocation window varies for consumers and corporations. As a consumer, you usually have time until you get your bank statement at the end of the month. But, if you’re on the bank side, you’d want to check your accounts daily as the window is quite short—about two days at the max.
In a nutshell, ACH transfers offer a cost-effective, secure way to transfer funds. However, understanding the details of processing times, transaction limits, and the ability to revoke transfers can help you make the most of this financial tool.
The Difference Between Wire, ACH, and Real-Time Payment Systems
Let’s discuss the difference between wire transfers, ACH (Automated Clearing House) transfers, and real-time payment systems. Craig Jeffery explains these systems, how they work, their limits, and when you might choose to use one over the other.
Wire Transfers: Direct and SWIFT
A wire transfer is a direct transaction between two bank accounts. It is individual and thus quicker than ACH transfers, which are processed in batches. This system requires approval for each instruction before being sent through the Federal Reserve (Fed) system or other options such as the Clearinghouse Interbank Payments System (CHIPS).
You might choose to do a wire transfer over an ACH transfer because it is an individual transfer, quicker, and irrevocable, meaning it can’t be returned. It’s also often used when contractual requirements exist or when there’s a need to settle bond or interest payments.
There are limits on wire transfers, though these vary between banks and could reach up to a billion dollars per wire. If the amount exceeds the limit, multiple transfers will be required.
Wire transfers can go through two main systems. The private system is the CHIPS, and the central bank system is the Fed Wire.
ACH Transfers: Batched and Streamlined
ACH transfers, unlike wire transfers, are batched. Suppose you’re paying 1,000 employees. Instead of individual transactions, an ACH transfer sends a single file to the bank with all the payment details. This file contains credits to the employees and an offset to your account.
The bank then submits this file through NACHA (National Automated Clearing House Association), which delivers all the settlement information to the respective banks of the employees.
Real-Time Payment (RTP) Systems: Instant and Expandable
Real-time payment systems are another method for transactions. This system is newer than wire and ACH systems, implemented in 2017. It offers instant delivery and allows more information about the payment, making it easier to integrate. The limit is a million dollars, and it’s cost-effective, charging about a nickel to use the system.
The advantage of RTP systems is their ability to process payments rapidly. Their technology allows for greater speed, scalability, and functionality, unlike older payment systems with a linear approach.
So, the choice between wire transfers, ACH transfers, and RTP systems depends on the need, whether it’s speed, individual or batch processing, or contract requirements. Each has its place and provides options for various situations in the treasury management sphere.
The Costs and Considerations of Different Payment Types
Let’s focus on understanding the costs of different payment methods and considering which methods work best for corporate treasury functions.
Real-Time Payments vs Wire Transfers: A Cost Perspective
When it comes to comparing Real-Time Payments (RTP) and wire transfers, the emphasis is placed on cost implications. Craig Jeffery points out that RTP costs hover around the same as an Automated Clearing House (ACH) transaction—about four and a half cents. Importantly, these costs can go down as the volume of transactions goes up, signifying that increased usage can lead to economies of scale and reduce transaction costs.
The FedNow System: A New Player in the US Payment Landscape
Jeffery brings our attention to the FedNow system, a new payment service launched by the Federal Reserve Banks. Although the system comes with a slightly higher cost—45 cents per transfer—it could be more efficient in monitoring, tracking, and managing transfers. The more comprehensive view reveals that improved process efficiency and resource allocation might offset these costs.
The Power of Batch Payments
Next, we delve into batch payments in the context of ACH transactions. Here, multiple payments are processed simultaneously—for instance, during payroll or accounts payable runs. This grouping allows for efficient processing, even if it is not the quickest method. Unlike individual payments such as wire transfers, batch payments can reduce costs.
Aligning Payment Mechanisms with Corporate Treasury Needs
Moving onto corporate treasury needs, various considerations must be made when deciding on payment mechanisms. Jeffery notes that treasurers must consider costs—both from the bank’s side and the entire process—the method and ease of communication with trading partners, the richness of payment information, and the compatibility of payment systems with the company’s existing treasury, payable, and admin systems.
Further highlighting the importance of payment information, Jeffery emphasizes that it should not only facilitate accurate execution and settlement but also ensure that receivables are correctly allocated and applied. Payments must include enough information to prevent confusion or the need for additional communication, thereby avoiding delays and inefficiencies.
To wrap it up, the choice of a payment system in a corporate treasury context isn’t a simple one—it’s a balancing act between efficient and accurate transactions and cost-effectiveness, guided by the capabilities of the existing systems.
Ensuring Smooth Reconciliation and Payment Monitoring: What’s the Secret?
Picture this, you’ve sent payments to your suppliers, and all is going well. But then it’s your turn to receive payments, and you suddenly worry about whether your customers will provide you with the right information. You don’t want to be left wondering about the specifics of each transaction, but can you demand a specific payment format?
According to our expert guest, Craig Jeffery, getting your customers to comply with your preferred payment format can be tough. Sure, it would be ideal for everyone to use standardized formats like the EDI BPR segment in ACH payments or the standard XML for instructions. But the truth is, you can’t always make that happen.
Bridging the Gap in Payment Information
That’s where banks and integrated receivables providers step in. They have ways of combining different payment types and sources of information. Sometimes, payments come with all the information about the transaction, and sometimes, they don’t. For example, a customer may send the payment separately and then email you the details of the invoices they’re paying. Bridging this information gap and processing payments is crucial to the payment cycle.
A Peek into Strategic Treasure’s Approach
So, how does Craig’s company, Strategic Treasure, handle all of this? As the managing partner, he guides the company’s strategy and oversees its four core business areas:
- Advisory: This involves traditional consulting in all areas of the treasury.
- Assist: This function handles tasks companies might not want to do themselves—think cash positioning, forecasting, card management, compliance work, etc.
- Inform: This part of the business includes a media outlet called CTM File and a couple of podcasts. The goal is to keep treasury professionals informed and up to date.
- Research: They conduct a minimum of 12 annual research surveys and do research for various payment companies, fintech, and banks.
Strategic Treasure takes a comprehensive approach to treasury management, from consulting and assisting to educating and conducting research. This integrated method can help deal with the headaches of managing payments and account activities.
The Role and Impact of Research at ‘Strategic Treasurer’
When you think about research, what comes to mind? Is it a group of people in a lab carrying out experiments? Well, at Strategic Treasurer, they do research too, but it might not be what you’re thinking. They’re not cooking up the next big treasury system or drafting PhD theses. Their research is all about gaining a deep understanding of the market and its trends.
Craig Jeffery explains that much of their work involves primary market research. They aim to collect new data and information directly from the source—whether that’s through surveys, interviews, or other methods. This research helps them gather insights to guide private equity firms, such as where to invest or aid product management teams in understanding market pain points and hurdles.
The Motivation Behind the Research
So, what keeps Craig Jeffery motivated in this line of work? It’s simple—his passion for learning and solving problems.
On the advisory side, he enjoys talking to people, understanding their issues, and providing solutions tailored to their needs. It’s not about offering a one-size-fits-all solution. Instead, it’s about recognizing each company’s unique complexity and challenges and proposing solutions that make sense for them.
On the research side, the excitement comes from seeing what’s happening in the treasury world. Talking to many people and gathering data allows for a broader perspective, often revealing nuances that may not have been evident at first glance. This constant learning and the opportunity to help others navigate these changes keep Craig intellectually stimulated.
Finally, there’s also the relational aspect that keeps Craig going. Fostering ongoing relationships with companies and tech firms is integral to what they do at Strategic Treasurer. Ultimately, it’s about blending the new with the old, enjoying the thrill of analysis, and putting it together meaningfully for their clients.
Exploring the Podcasts by Strategic Treasurer
Craig Jeffery shares insights about two main podcasts they run:
- The Treasury Update Podcast
- The Open Treasury Podcast
The Treasury Update Podcast is the primary show of Strategic Treasurer and has been on the air for nearly five years. This show covers various topics, with a series focusing on themes like “Becoming a Treasurer.” They also host “Coffee Break Sessions,” where they touch on basic topics that aim to educate the market.
The Open Treasury Podcast is another show they put out weekly, but this one focuses more on news events that impact treasury. Released every Friday morning, it’s the go-to show if you want to stay updated with the latest economic trends or other treasury news. It often features guest speakers who share their viewpoints on the week’s top stories.
While the Treasury Update Podcast provides a broad education, the Open Treasury Podcast dives into current events and their impact on the treasury sector.
While it may seem like Strategic Treasurer has two distinct podcasts, Craig Jeffery clarifies that the Treasury Update Podcast is part of the Strategic Treasurer brand. On the other hand, the Open Treasury Podcast is associated with the CTM file brand. Despite being involved in both, he assures that there’s not a third one in the works!
Apart from sharing information about their podcasts, Craig also highlights his involvement. While he appears on the Open Treasury Podcast only every couple of months, he’s a regular voice on the Treasury Update Podcast. He emphasizes the value of these platforms, not just for listeners but also for him. They serve as platforms for learning, sharing views, and even challenging assumptions, making them an invaluable resource for all treasury professionals.
Conclusion
Through our journey of understanding the Strategic Treasurer’s role and operations, we’ve unravelled the vastness of their work and their impact on treasury professionals globally. From offering tailored treasury advisory services, and conducting critical primary market research, to hosting enlightening podcasts, their contribution to the field of treasury management is unquestionable.
We’ve delved deep into how they focus on devising customized solutions for each client, considering the unique complexities and issues they face. We’ve discovered how their primary market research, involving surveys and interviews, guides various firms, helping them identify growth opportunities and address their pain points.
Notably, the passion driving Craig Jeffery, the key person behind the Strategic Treasurer, is infectious. His love for continuous learning, deep analysis, and fostering relationships underpins everything he does.
Their podcasts, the ‘Treasury Update Podcast’ and the ‘Open Treasury Podcast,’ provide education, market updates, and engaging discussions for treasury professionals. With a mix of interviews, news discussions, and educational content, these platforms offer a wealth of knowledge.
Understanding the Strategic Treasurer’s operations and influences brings us one step closer to comprehending the complex, ever-evolving world of treasury management. It underlines the importance of staying abreast of industry updates, embracing continuous learning, and leveraging expert insights for effective decision-making.
As we navigate this dynamic environment, the wealth of knowledge shared by experts like Craig Jeffery and organizations like the Strategic Treasurer provides valuable guidance, assisting us in making informed decisions that align with our strategic objectives. Keep learning, keep exploring, and remember every piece of information can potentially unlock breakthroughs in your treasury journey.
