Straight Through Processing (STP) is a process or paradigm that financial departments inside of Telecom, Utilities, Energy, and Tech use to dramatically speed up their order-to-cash transaction processing time. The main benefit of STP is to let companies have the same data streamlined throughout a process, across multiple points. This limits the labor intensive and manual processes where financial professionals have to enter the same information over and over again – checking to ensure a transaction was fully processed. This inefficient process raises chances for errors so much, that they are expected. Instead, STP allows companies to share information digitally (or electronically) in a quicker, more secure and effective manner.
STP is ALL about automation, right from the initiation of a transaction to the point where it is fully settled. Real-time settlement – not in days, but in minutes and hours – is what banks and corporations are both looking for.
A best practice around STP is to build a business specific workflow that has a number of steps that have are pre-defined. During processing, the system automatically then moves through each of the defined steps. If an error is thrown, an alert goes off, or something unusual is encountered during the STP workflow, the system moves to rectify the error. This means that minimal manual intervention is required and only used when it is absolutely necessary.
Payments, by their very nature are complex. Many players are deeply involved in this area, including Banking, Clearing House services, Service Providers. It gets harder when you have to integrate all these different services together to enable more efficient and trusted STP.
Because many of the processes involved in the payment transaction are still manual and require physical documentation, laborers are needed at every stage, especially when it comes to decision-making. And due to human error, the quality of data is often error filled, so that human intervention is required before the transaction sets can be processed further. This means manpower is spent on fixing issues or reconciling data – when it could be used to free and empower financial professionals to focus on other strategic projects that could impact revenue.
Corporations need to achieve STP in their systems and platforms to reduce their DSOs and close any time or efficiency gaps in their payment process. Because their payments and receivables stream through their banking processing systems, a more efficient STP at the bank’s end means faster processing of transactions and faster, more appropriate information transmitted to key parties in a timely, more trusted manner. A bank that recognizes superior STP rates will let the businesses and corporations that are integrated to get better STP rates as well. These entities can access funds faster, more securely, and in real-time.
There are many achievements to be had with STP. The automation of payables and receivables. Agility. Transactional intelligence for proactive and reactive decision making. Business intelligence. Working capital optimization. Secure and transparent payment processing. Cash (and liquid value) predictability. Improved customer experience. The quality of accessible data. The lowering of operational costs (OPEX). The removal of manual processing errors. And that’s just the beginning.
STP can reduce complexity, increase profits, and improve customer satisfaction for a business of any size. With Globys, your entire payment cycle management can be digitally transformed into an efficient STP system, saving you time and money compared to traditional and document based payment processing.
For more information, please see our demo!