Effective payment processes have never been more important. With continued economic pressure, strong cash flow management and control is essential. Following the recent payment debacles from leading high street banks, there are a growing number of Finance Directors looking closely at the costs and risks associated with current payment methods.

For many organisations, the benefits of an on-site infrastructure with fully flexible payment processes remain the best option for that organisation. For others, the pricing models and reduced IT overheads associated with cloud computing may offer timely cost savings and, critically, remove the risk associated with the direct bank relationship.

Whether or not your business makes a change, it is incumbent upon every Financial Director to assess choices and understand the new opportunities and benefits offered by cloud computing.

Aligning processing complexity and technology

With the pressure on the finance team to improve efficiency and reduce costs, a growing number of SMEs are actively exploring new opportunities to transform performance by assessing the potential of cloud-based technologies within the business.

In a world of Internet banking and near real-time global payments, many finance professionals admit they feel increasingly constrained by outdated systems or manual payment processes that add both cost and risk. For smaller organisations the only alternative appears to be Internet banking – a somewhat clumsy, laborious approach that offers limited functionality and very little flexibility.

There has, however, been an element of fear of technology change – exacerbated, perhaps, by a lack of clear information. Organisations that have proactively embraced innovation in other areas are often reluctant to make changes within the risk-averse finance department – especially when it comes to mission-critical and data sensitive payment processes.

Add to this that accounting software vendors are behind the game when it comes to developing cloud-based solutions, the lack of innovation within finance in recent years is understandable.

However, there is now a diverse range of payment solutions available via cloud computing. Given the recent unreliability of banking services and the clear need to reduce risk by creating a more flexible payment model, it is essential for organisations to ascertain the best payment process for the business.

The decision to move from traditional, on-premises software to a hosted model provides organisations with an ideal opportunity to assess existing infrastructure, IT strategy, payment volumes, processing requirements and costs.

Furthermore, hosted models offer additional benefits such as shifting expenditure from upfront CAPEX to monthly OPEX budgets; automated, immediate solution updates versus physical software upgrades, flexibility around system availability and remote access; reduced hardware sprawl and underutilisation of servers as well as improved Disaster Recovery and back up services.

From traditional to hosted models

The good news for organisations that have eschewed new technologies to date is that the growing maturity of cloud-based solutions now offers a raft of options and advantages. Critically, every one of these solutions can be bank agnostic, providing organisations with confidence in the ability to complete time-critical transactions.

The traditional On-Premises model offers functional software, located on site using traditional hardware, infrastructure and IT staff costs. This tangible approach remains a viable option for larger organisations, with high payment volumes requiring complex processing and direct integration between payment and finance systems, as well as a strong commitment to an internal IT infrastructure.

Alternatively, companies can reduce IT overheads with a Privately Hosted Solution that moves away from the ‘server hugging’ approach but still uses the same software. Hosted off-site, this dedicated system offers the identical functionality and can be linked to the in-house ERP, accounting or payroll solution, but provides a very different cost model.

For organisations with less complex requirements or looking to share the back-office payment function, a Shared Hosted Solution offers an even lower cost model. Most importantly, hardware and software ownership shifts to the hosted solution provider, making IT infrastructure even less onerous for the company but offers improved resilience.

Instead of direct integration with the in-house ERP, payroll or accounting solution, the payment file is transferred to the solution provider for submission. This approach enables a business to outsource the mechanics of payment submission to a third party, whilst still maintaining control over the validation and authorisation processes.

For smaller organisations, a low cost, pay as you go Bureau Service model provides 24×7 access to a cut down payment solution that demands no IT expertise or equipment, yet still enables fast and secure payments via BACS.

In contrast to the Internet Banking alternative, the Bureau model enables multiple bulk payments and Direct Debit collections to be made anytime anywhere, improving business flexibility while also supporting the HMRC Real Time Information (RTI) initiative.


Given the on-going financial crisis and risk of triple dip recession, there is a pressing need for finance teams to overcome the inertia created by a powerful combination of finance conservatism and the accountancy vendor’s lack of commitment to cloud computing. The options are compelling.

There is no longer a stark choice between the more robust and costly on-premises software or an Internet banking solution that not only lacks the required functionality, but also makes it incredibly tough to move banks irrespective of the quality of service.

With multiple choices on offer – from on-premises software solutions to a full bureau service with a hybrid of hosted solutions in between – organisations of every size now have the opportunity to attain a payment solution that best meets today’s requirements while also supporting on-going changes in a complex, real-time, global payments environment.