SWIFT, short for “Society for Worldwide Interbank Financial Telecommunication”, was founded in 1973 by Belgian giant telecommunication. At the time, SWIFT was groundbreaking because it provided a network and a platform for banks to facilitate cross-border fund transfers. SWIFT uses messaging service as its base to share the details of cross-border financial transactions.
The member banks and financial institutions verify the transactional information end-to-end to ensure the integrity of transfers. SWIFT works on a centralized server location mechanism, which is obsolete now. The recent success of blockchain has put a question mark on the utility of SWIFT networks.
Moreover, using centralized technology means that SWIFT networks are prone to cyberattacks now more than ever. Recently, the world was shocked by the news of a cyberattack on the Central Bank Of Bangladesh that claimed $81 million. SWIFT servers are a lucrative target for hackers because they have to get into one data set to fetch hundreds of millions.
The news from Bangladesh sparked serious concerns among the member banks, and some started looking for alternate options. Blockchain looks attractive because it is transparent and uses a decentralized storage mechanism, making it difficult to hack and gather information. The data is stored on several nodes spread across the globe.
Therefore, a hacker will have to hack all the ledger locations at once, which is quite impossible. For this reason, blockchain-backed Ripple is dubbed the future network and has already claimed 75 global banks. In addition, some banking giants like JP Morgan have even developed their blockchain networks to tackle the issue of cyberattacks.
Banks are under tremendous pressure to ensure data privacy and protection while lowering costs. This has forced the SWIFT leadership to devise a solution where they can switch to decentralized technology.
In 2019, SWIFT, in partnership with a consortium, developed a proof of concept to reconcile the global databases so they could build their blockchain network, which required tremendous infrastructural changes at the end of the member banks which had already invested in the centralized technology. Under these efforts, SWIFT is now all set to test CBDT or Central Bank Digital Currencies for international transfers.
Blockchain: The need of the hour
SWIFT has over 11000 clients and boats of around 15 million transactions every day. This means that SWIFT still has clout because of its long-standing reputation. Moreover, the leadership group at most banks is still orthodox and does not want to take their chances with blockchain-based technology.
But recent cyberattacks on centralized servers have sparked concerns and alerted the authorities at SWIFT to take necessary steps before it’s too late. Despite the reluctance of SWIFT’s CEO, who compared the popularity of Bitcoin with the 16th century Tulip Mania, it is pretty apparent that blockchain overcomes all the negatives of the SWIFT network.
First and foremost, the blockchain has a decentralized network, meaning no one can control the web for their gain. Second, it is impossible to hack the overall blockchain network because the hackers won’t find any databases. All the transactional information is stored on nodes distributed across the globe.
This will ensure faith among the millennials. Recently, Ripple saw a massive gain in popularity because it showed the world that cross-border fund transfers could be completed within seconds as opposed to SWIFT, which takes five days to conclude a simple transaction.
Third, blockchain keeps an open ledger, which is available to the public eye, so any cyberattack will instantly alert the people taking care of the ledger. Open ledger means anyone can keep note of the businesses and trade going on in the world.
Ripple has taken advantage of these benefits and developed a system where users can enjoy the benefits of cryptocurrencies as well as traditional banking methods. Due to this, 100+ financial institutions have already signed up with this up-and-coming platform.
Seeing the massive shift in technology and general public perception, SWIFT even came up with its own system called GPI technology. But the reason that it has not gained much clout is that GPI is not ripe yet and it can only compete with some of the newer blockchains, which is of no use. Therefore, it has been realized that this decade is going to be blockchain’s.
SWIFT’s plan to test CBDC’s ability to facilitate cross-border payments
CBDC transactions are stored on a digital ledger, which may or may not be blockchain. However, seeing the stability and success of blockchain, most CBDCs are backed by blockchain only. SWIFT is the mogul of global financial message services. However, it is trying to tap into the digital currency market to ensure better client data protection. SWIFT’s venture is to link several CBDC networks to facilitate cross-border fund transfers.
According to the news, SWIFT has partnered with French telecommunication and consulting giant Capgemini to carry out this ambitious plan. On several occasions, SWIFT spokespersons have pointed out a gray area in the operation of CBDCs. SWIFT has maintained that CBDCs have far more use cases than domestic applications.
The goal of SWIFT’s partnership with Capgemini is to work on specific use-case scenarios such as CBDC to CBDC, CBDC to fiat, and Fiat to CBDC. The leadership group at SWIFT strongly feels that the coming era belongs to digital currencies because CBDC has shifted the digital market towards stability.
The head of innovation at SWIFT has even stated that CBDCs could be the new fiat currencies. So, we can expect several platforms to rival the traditional payment methods. Thomas Zschach, the SWIFT CIO made a very compelling case for CBDC by stating that “Facilitating interoperability and interlinking between different CBDCs being developed around the world will be critical if we are to realize their potential fully.
Today, the global CBDC ecosystem risks becoming fragmented with numerous central banks developing their digital currencies based on different technologies, standards, and protocols.” This means that SWIFT has decided to compete with the global tech giants by changing its strategies and shifting to modern ways of the blockchain.
Any business with workers who expend costs should have a robust plan in place to manage these charges. Even if you only have a few employees piling up expenses, you’ll need a guide to clarify what is and isn’t compensable. You can keep costs under control while keeping your staff motivated and productive by drafting an expense management strategy and revising it as necessary as your company expands.
We believe having a valid written expenditure policy is essential for any company. The idea is to assist you in creating an approach that benefits everyone in the company and doesn’t take several weeks to develop. Let us clarify why you need a company expense policy and tell you everything you should look for in a reasonable cost policy.
What Is the Meaning of a Company Expense Policy?
An expense policy is a collection of guidelines that specify what a company’s employees can do with the organization’s funds. They’re usually spelled out in paperwork that workers must sign after entering their employment contract.
This agreement should clearly state how your organization handles business costs and describe how employees can be compensated.
While each company’s expenditure policy is different, the majority of them include the following essential elements:
● A list of all expenses that can be reimbursed that is precisely specified.
● A step-by-step approach to filing a claim for expenditures.
● What happens if there’s a disagreement over expenses?
Many things influence the particular language of your policy. For example, if you’ve recently raised funding, it makes sense to be a little more flexible, but the company could choose to stick to a stricter budget.
What Is The Purpose Of A Company Expense Policy?
It’s easy to overlook an expense policy during the initial stages of a business, but every expanding company should consider implementing one.
When numerous employees purchase items for commercial purposes, the cost of these purchases can quickly become out of hand. In addition, people may wind up overspending or buying unneeded products if the restrictions are ambiguous (or do not exist), producing a drain on corporate funds.
Worse yet, they may abuse the system by making personal or unauthorized purchases with the employer’s funds. Therefore, expense report forgery, whether deliberate or unintentional, is a significant issue.
Even if you currently have guidelines for employee spending, formalizing them with an expenditure policy might be beneficial. Everyone remains on the same page when information is written in an official statement, making the compensation process easier and faster.
What is the best way to make an expense policy?
Although it may appear complex, setting your first expenditure policy does not have to be complicated. Start with these six suggestions:
Identify Costs, Budgets, And Groups Because you’re providing a sustainable strategy. It should have been based on the financial status of your firm. It’s a good idea to consult your CFO or, if you don’t have one yet, get professional advice if necessary to prepare reasonable budgets.
Establishing the different expense types that employees are allowed to claim is the.
Please take into account what they’ll need to succeed in their career and what they won’t be able to afford.
As far as ordinary employee expenses go, we recommend:
● Ticket prices for planes and trains are examples of transportation costs
● Mileage reimbursement when driving their car during work, business trips, hospitality, and recreation (networking )
● ‘Meals and drinks,’ or food and water
● Seminars and resources for training
● The price of a hotel
● Fees charged by credit cards
Practice Impartiality
It’s critical to be ethical to your staff when implementing your new policy. Classify all employees reasonably and don’t make exemptions; this will help everybody feel more appreciated.
Keep an eye on how long it is required to execute employee compensation. You would not ask your relatives or friends for an interest-free line of credit, and you should never ask your coworkers.
The effect of treating team members with respect is a well-functioning working environment.
Maintain A Straightforward Approach
A good expense policy must be simple to read. Examine your language to see if it’s simple enough for everybody to grasp. When it’s unnecessary, you shouldn’t go too far into detail – you would not want to end up with a 50-page booklet that no one else will finish.
And when you’re at, make your expenditure report processes as simple as possible.
Continue To Update Your Information.
An out-of-date policy may not cover increasingly prevalent business travel methods like carpooling and staying in a shared economy hotel. It may also underestimate any changes in your group’s total budget.
Treat your expenditure policy as you would the rest of your company. Your firm’s status is continually shifting, and the regulations must represent that.
For instance, the restrictions and exemptions you establish in year one are unlikely to apply in year five. Your staff will have developed, and the expense policy must be modified to accommodate this.
Use Technology To Your Advantage
Finally, think about how technology might help you improve your expenditure management workflow. Many previously time-consuming procedures can now be streamlined and simplified thanks to the integration of expenditure management systems and accounting software, sparing your finance staff from manually handling expense data. The issue in the past has always been that an expenditure plan was often a static concept that was likely to be glimpsed at and then forgotten about by an employee. A guideline becomes an interactive element of employees’ everyday workflow with the correct digital management setup. Not only would this save you and your staff time and energy, but it will also enhance the reliability and uniformity of your documents, putting you in a better position to deal with an examination.
What Should A Company Expense Policy Contain?
Let’s get right down to business. What are the requirements for an expense policy?
Budgets for each category of expense
To begin, you must describe who creates and controls the finances for each group or category of spending. Then, when workers are hesitant, they need to recognize who to go to. Even better, the policy can attempt to contain particular budgets for every expenditure category, such as travelling, office equipment, advertising, marketing, etc.
This may not be viable since funds vary in months and when new requirements arise. So instead, try also to include fundamental budgeting rules and standards.
A Reimbursement Strategy
When it comes to reimbursements, there are two things to keep in mind:
Employees must be compensated. This is both a respectful thing to do and a lawful necessity.
The staff has more important tasks than filing expense reports. Most people would put it off or neglect to do it even though it is their money!
You must be clear about what they must do to claim expenses. For example, what is the procedure, who is in charge, and is a deadline given?
These elements should be clearly stated inside the policy manual, and workers should be aware that they must be taken seriously.
Now Is The Time To Get Down To Business
Developing an expense policy is a critical duty that will undoubtedly aid you in avoiding future problems.
It’s also not overly burdensome. All you have to do now is figure out what to include and consider the unique issues your company faces.
Every business, irrespective of the scale and sector it is related to, requires a good set of clout and contacts within the industry to enable its pathway to success. This is especially true with the procurement process, both direct and indirect. Though many well-known industries resort to direct procurement methods, indirect procurement can also prove to be highly beneficial when implemented appropriately to meet the specific features and requirements of the company in question. Here is a quick guide to help you understand how you can use indirect procurement to your benefit within your firm.
The definition
For better understanding, here is a short one-line description of direct and indirect procurement.
Direct procurement: Here, the process involves a business directly approaching the source in search of raw materials.
Indirect procurement:
Contradicting the prior, indirect procurement is a process wherein the businesses are not directly related to purchasing raw materials or supplies.
Here the purchases are not directly linked to the firm’s revenue generation. Though these materials are necessary for the company’s proper functioning, this spend category is often overlooked.
Choosing between direct and indirect procurement
Like most aspects of running a business or anything related to the marketing industry, the decision between direct or indirect procurement methods for your business is very subjective. Therefore, it is the responsibility of the involved personnel to thoroughly analyze the company’s requirements across different terms and dimensions. A few things you should consider while deciding on this would be cost, quality, reliability, etc.
Making use of indirect procurement
Though the process of managing indirect procurement can be pretty complex compared to the direct variant, many professionals and experts in the field have now come up with the statement that this method of indirect procurement can prove to be highly beneficial once the folk learns to make use of it the right way.
Currently, many interested individuals in the research fields have to come up with exciting ways to use their indirect procurement function by innovative means like combining and integrating it with techniques of direct procurement. However, one of the significant hurdles that stop indirect procurement techniques from achieving their deserved popularity is that many of the leading indirect procurement service providers lack any popularity within the associated field.
These companies started developing ways to improve their services and the customer’s knowledge about the same and decided to create a new vision. This new vision has now allowed the combination of cutting-edge tools and conventional practices to ensure highly appreciated levels of innovation and improvement in the overall functioning of the firm. This has also allowed the industry’s essential heads to better understand indirect procurement and how it can help their business.
Elements to focus on
Indirect procurement is a process that is still not wholly perfected for general usage, which is why there is no fixed outcome that you can expect out of it. However, it can be safely said that it can significantly benefit your business and boost its revenue when appropriately used. The mainstay methods by which they can improve your revenue are as follows.
They help identify maverick spending, which refers to any unaccounted expenditure. With quick identification, you will be able to rectify them promptly.
They consolidate your purchases and simplify bookkeeping.
Better management of relationships with suppliers can be ensured.
Allows for automation of underlying processes with software solutions, thereby significantly reducing the chances and incidence of human error within the system.
On the other hand, the technique and methods involved in indirect procurement also hold a few challenges, which may result when you leave out any loose ends. A few of those possibilities include:
Scale. By allowing you to take up many contracts involving even more suppliers, the enormity of detail might become overwhelming.
Chances of missing information resulting from minor instances like the absence of involvement of approvers along every step of the process.
As many concerned individuals join the process, controlling their spending is pretty tricky.
Important Considerations
In many smaller setups, the processes associated with procurement are handled by the financial team itself. This makes it more critical to ensure that the designated personnel have a good idea about the required tasks and details to be taken care of. Apart from clearing things out with your supply lines and having clear business goals, you will have to focus on the following aspects without fail.
Costs
This is not focused directly on reducing the overall cost only. Instead, it is an indication to ”control” the costs, as it is not always the best choice to go with the lowest possible price. The best way to get along with this is by creating an excellent mutual relationship with your vendors and suppliers and effective communication.
Automation
In this modern business era, automation of almost every process is underway as of now. In that case, many process automation techniques are also being implemented within this sector.
CSR
Short for Corporate Social Responsibility, this expects the indirect procurement decisions to be in line with the social responsibilities required by the company, ensuring proper maintenance of the company image and reputation.
Improvements and newer visions
New techniques and modes have been developed recently with the identification of methods to improve the implementation of indirect procurement methods to benefit the functioning of businesses. With newer methods being developed by the experts, many of the leading industries and markets have started making use of these integrated and powerful combinations to get the best out of their procurement process.
To obtain the best possible results from the same, rather than simply acquiring them, it is also important to implement them and use them in ways that utilize all the resources appropriately. The first step towards achieving that would be to get a clear picture of the system’s absolute structure and features. Here are a few noteworthy ones among the newer tactics.
Improved speed engines
These are digital tools with improved technology that use automated engines combined with machine-learning technologies. The key focus of their work is to classify and categorize spending while providing a good amount of transparency as far as the analytical and validatory aspects are concerned.
This is made possible by the presence of features that allow the system to automatically extract data from ERP and databases and by helping with automated harmonization and classification systems. This integrating function ultimately helps improve different segments of the process like data cleansing, categorization, and improvement tools. Apart from that, almost every sector appreciates good transparency. The same applies here as well.
Better analytics
This is mainly in line with the tools responsible for target setting, which work towards identifying cost-saving and optimization methods. By using such elaborately designed tools to help with your process, your business should be able to reduce both the product and service costs by around 10 to 25 percent. The manual effort for governing the supplier, on the other hand, is brought down by a whopping 30 to 50 percent. A few tools that would be appropriate to be mentioned here include category-specific tools, innovative workflow platforms, and advanced functional and analytical tools.
Conclusion
To wrap up, indirect procurement techniques remain among the few underrated methods and processes within the field of marketing and business. From this article, it must be pretty clear that when used properly, this can help you achieve your business goals by improving every step involved.
