Senior ExecutiveTechnology

Crafting a Compelling Business Case for Investing in Payments

By June 19, 2024No Comments

How one NeuGroup member created the “ultimate road map” to get buy-in for building out a payments factory.

Large-scale initiatives, such as the build-out of a payments factory, are major undertakings that require significant investments of both financial and human capital. At the first-half meeting of NeuGroup for Payments Strategy sponsored by HSBC, members explored the keys to building a successful, comprehensive business case to justify the allocation of resources and get buy-in from management.

  • One member, who helped lead the session, walked through his process to implement a payments factory to address fragmented and inefficient systems, with disparate platforms creating complexities in payment validation and processing, creating the need for standardized controls.
  • But to overcome that burden and build a robust, scalable and secure infrastructure, the first stop had to be winning the support of leadership with facts and figures. “Having senior management advocate for the project is key; if you don’t have that, it’s not going to be approved,” he said.

Costs and the budget battle. Getting that support is especially critical for finance functions. The member works at a company with dozens of subsidiaries and limited budget for internal projects, with customer-facing initiatives taking the highest priority. “Everybody fights for the remaining allocation, with finance at the bottom of the chain,” he said. “It’s unfortunately been a challenge.”

  • It’s a pain point shared by many NeuGroup members vying for IT support—services billed to treasury—just one of several costs the member had to justify. Others include:
    1. The price of the payments hub software.
    2. The vendor’s professional services team, which provides consulting services to assist with the implementation.
    3. Additional modules to add to the software.
    4. Contracting with a SWIFT Service Bureau.

    An ultimate road map. The member recommends starting by crafting an “ultimate road map” that breaks the process into manageable pieces, clearly articulating the economic benefits to each step. “The more you can show return on investment and what’s providing value, the better,” he said. “Is it going to do anything for customer retention, or dollars and cents?”

    • But don’t exaggerate. “Have realistic benefits, and a realistic timeline.” He added, “I’ve seen lots of unrealistic goals. If you say six months, but really it’s a year or a year and a half, you start to lose credibility. But if you’re able to deliver and capture ROI, you develop goodwill in the company. Then it just gets easier and easier.”
    • That resonated with another member, who led a similar infrastructure overhaul. She too emphasized the need to start by laying out the tangible benefits of a payments project. “If the benefits don’t outweigh the effort, the project might be dead on arrival,” she said. “For us, the client is the most important stakeholder. If the project benefits them, our CEO will consider it.”
    • In her experience, one of the best additions to building the business case came from the company’s banking partners. “Our objectives are the same as a lot of our banks, and through conversations with them, we were able to make sure that we showed this would give us what we needed.”

    More allies, more success. Cast a wide net when looking for advocates in leadership roles. For the member’s payments hub, they included the treasurer, IT senior leaders and other senior business leaders. Part of the case to IT leaders included enabling them to retire legacy systems; other leaders saw value in the improved controls. Here is some of what the member has achieved:

    • Focusing initially on the highest-value transactions, the platform now processes 80% of the value of the company’s payments, despite only handling about 40% of the overall transaction volume.
    • Another critical component is the payments gateway, which consolidates payee banking information from legacy systems into a single secure repository. This database stores payee payment preferences and allows for API access to pull banking information as needed.
      • Additional controls include connections to the company’s delegation of authority system, and account validation services.
    • Also planned: A migration from checks to electronic payments, with an aim to reduce reliance on checks to improve efficiency and security.
    Justin Jones

    Author Justin Jones

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