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Is Digital Cash the end for the Payment & Bank Reconciliation processes

Terri Reeves Thursday, June 1, 2017 Blog

Hands up if you love to configure the SAP payment process and bank reconciliation, or salivate at the thought of reconciling those bank clearing accounts!

The Bank Account configuration in SAP maintains a legacy of cryptic symbols that can only be deciphered by those inducted into its dark arts. The codes attempt to assist those that are tasked with ensuring that what the system says has been paid or received, has actually been transacted by your bank.

The timing difference, between payment acceptance from your customer and payment acknowledgement by your bank, is managed by a clearing process governed by the Australian Payments Clearing Association (APCA). The customer’s bank interacts with your bank which confirms that indeed the funds have been transferred, via the bank reconciliation process.

The McKinsey Global Payments Map highlights Australia among the top countries in the adoption of electronic and card-based payments. Over the past 10 years, cheque usage has dropped 73% and cash withdrawals from ATMs are continuing to decline.

The acceleration towards electronic payments will only continue and the APCA is responding by launching a new payments platform (NPP) to provide real-time clearing. A development worth following as it will remove the traditional overnight(s) delay for money transfers between entities.

Although this is a great initiative, the extinction of the bank clearing process will only occur when the need for the clearing platform itself is eliminated.

Enter Digital Cash.

Like real cash, this system requires no clearing platform between seller and buyer, while the minting is approved by the Reserve Bank of Australia. The serial number on your twenty dollar bill is replaced by digitally signed encrypted currency.

A deposit it into your bank account is still needed, but unlike real cash, you can do this electronically without a security guard attached!

For the past few weeks, I have been using Digi.cash and it’s truly a mind-bender. Digi.cash is approved by the Reserve Bank to mint up to $10m AUD as part of its trial deployment.  I have been sending and receiving money via OCR scan, via email and no doubt soon via tap and go. Too easy!  I can send the money back to my bank account at any time if I need to turn it into ‘old world money’.

Based on my experience with Digi.cash, I started wondering what it might mean for businesses that run SAP. Unlike bitcoin, this currency is not outside the banking purview of Government, so might it be attractive to the business community?

Just imagine the following scenario.

Your SAP ERP system has a Digi.cash store of bankable currency.

Your F110 payment run is executed but produces no bank payment media. No more XML PAIN files or old PAYEXT Idocs!!

Instead, an email to the vendor(s) is sent with the encrypted payment as an attachment (like a remittance advice). They then load it directly into their own ERP Digi.cash store and clear the customer open item on their system.

Gone is the proprietary banking gateway!

Goodbye IDOC failures and expensive payment media consultants.

And what’s more, you can replenish your digital cash store by emailing yourself funds from your bank account or set up a regular transfer cycle whenever you want? Better still, run your cash forecast and only have sufficient funds in your Digi.cash store required to cover the outgoings. However, like having real cash,  interest won’t be paid on your Digi.cash amount which may disappoint corporate treasury.

Nevertheless, I’m calling it. The Bank Reconciliation is an endangered species and the payment process in SAP will be radically simplified with the introduction of digital cash.

If you’re as interested in this topic, or related topics such as bitcoin, distributed ledgers/blockchain contact me here.


Henry Fernadez

Henry is the PLAUT Advisory Services lead and has doing SAP stuff for close to 30 years. He is currently exploring a range of interesting technology developments and likes to pose in front of strange signs.

Click here to get in touch with Henry.

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