Because of the significant role played by the settlement department in any big company, it is vital that it is given the support required to maintain the company’s credit rating, risk rating, solvency and cash flow. Through technological advances, corporate tasks are being improved and made faster and easier. Despite the recent leaps made in technology, settlement departments are still experiencing delays – especially in the world’s biggest energy companies. When one of many invoices can amount to several million, and the financial viability of the company is at risk, it is a major cause for concern. With technology constantly advancing, it is curious that settlement departments continue to struggle. Why is this?
Paper and Manual Processes Abound
Many settlement departments, especially in the energy sector, continue to use manual processes that are time-consuming and involve massive amounts of paper. But that’s not all – the amount of data produced is considerable and every part of it has to be processed, scrutinized and reported on. Each complicated transaction has a range of tasks attached to it making it a challenging feat for these departments to accomplish. The fact that human interaction is involved also affects general efficiency – with people driving processes, errors are inevitable, particularly during times when cash flow is flowing and prices are high.
Money is Not All That Matters
In most major companies, including the energy industry, the supply chain is highly regarded because of its complexity, its volatility and because of the necessity of its existence. Without the supply chain functioning correctly, the settlement department’s ability to function is greatly hampered.
Sharone Perlstein: Fintech is Changing the Energy Sector
Known for having made great improvements in a variety of industries, Fintech has recently branched out to include the energy sector. The aim is to improve governance and efficiency through automation and thus lower expenses and credit risk. To achieve this, the first step taken is to assess the data. The standard way of doing this is to source data from several sources into a single file for analysis. This is a time-intensive process prone to errors. With innovative systems that are integral to Fintech, processes are automated and financial transactions are completed more accurately and quickly.
Disrupting the Energy Sector
The advanced systems associated with Fintech, include payment processing functionality, data risk management systems and systems that analyze and predict cash flow across the supply chain. By implementing more efficient systems, operational costs are lowered and payment processing occurs faster and more efficiently. The technological advancement that comes with Fintech is particularly beneficial to settlement departments in the energy sector. The auditing functionality frees up analysts to spend more time on performing audits, which also helps speed up the process. Centralized data systems ensure smooth transitions and integrated data systems contribute to an efficient and effective supply chain. By going beyond merely providing back-office functionality Fintech is firmly cementing its role in the industry and is becoming known as a disruptor.