The success and efficiency of Canadian corporations is integral to the well-being of our economy. Part of that efficiency hinges on a corporation’s ability to send and receive payments seamlessly. Canadian corporations have long grappled with a problem in that regard: a lack of standardization of payment information. This has caused delays and inefficiencies in financial transactions.
The introduction of ISO 20022, an international financial standard designed to simplify global business communication, is set to address these pain points.
Benefits of ISO 20022 for Canadian corporations
ISO 20022 has a myriad of benefits for Canada’s corporations. For one, it will support efficiency, innovation and improved payment experiences for them and their customers through enriched payments data.
Without ISO 20022, Canadian corporations have suffered from confusion and delays due to a lack of necessary information to accurately and efficiently reconcile incoming payments with the corresponding invoices or purchase orders.
One of ISO 20022’s most notable features is structured remittance information elements. These elements provide a clear, standardized method for the transmission of invoice details, descriptions and related data. By establishing a clear and consistent format for remittance information, ISO 20022 eliminates ambiguity.
The adoption of ISO 20022’s structured remittance information element will translate into a host of tangible benefits for Canadian corporations, including:
Clarity and accuracy: The structured approach to remittance information ensures that invoices, descriptions and associated data are presented in a uniform manner. This newfound clarity will reduce the risk of errors stemming from misinterpretation or incomplete information.
Efficient reconciliation: Reconciliation processes will be significantly streamlined due to the standardized format. Corporations will be able to seamlessly match payments with corresponding invoices, accelerating the time it takes to verify transactions and balance accounts.
Automation capabilities: With structured remittance information, corporations can automate various stages of their financial processes. Automated systems can extract and process data more efficiently, reducing the need for manual intervention and minimizing the likelihood of human errors.
Speedy dispute resolution: Disputes that today take considerable time to resolve due to unclear remittance information will be swiftly addressed. The standardized format makes it easier for a corporation’s accountants to pinpoint discrepancies and resolve conflicts, leading to quicker dispute resolution and improved business relationships.
Enhanced operational efficiency: ISO 20022’s standardized approach cuts down on the time and resources spent on manual data entry, verification, and reconciliation of payment details. This newfound efficiency will empower corporations to focus on core business activities, potentially driving overall growth.
ISO 20022 and Payments Canada
Industry adoption of ISO 20022 in Canada is underway. Canadian corporations are encouraged to reach out to their banks to ask about the bank’s migration timeline so they can take advantage of the benefits ISO 20022 affords them. In March 2023, Payments Canada introduced ISO 20022 to Lynx, Payments Canada’s high-value payment system. The forthcoming real-time payment system — Real-Time Rail — will also support the standard.
Through this adoption phase, Payments Canada has defined new ISO 20022 payment messages and rules to be used between its member financial institutions and acts as the knowledge leader for ISO 20022 in Canada. The Payments Canada ISO 20022 team is dedicated to the pursuit of ISO 20022 adoption and actively provides resources and support to Payments Canada members and stakeholders through education, training and operational support.
To learn more about how Payments Canada can help your corporation unlock ISO 20022’s full potential and ramp up the efficiency of your financial transactions, visit payments.ca and reach out. And make sure to attend my panel discussion, Extending ISO 20022 benefits to corporates, on September 19 at Sibos 2023.