Perspectives 2019 2020 Public Sector

74 Digital Government: Key Steps to Automating Transactional Activity 1. Harnessing Enhanced Economic Efficiency, Transparency & Control In an era of tightening budgets, government spending is under increased scrutiny at both ends of the cash flow spectrum, with tax payers and Central Treasury teams demanding increased transparency & accountability across all departments. Public sector entities need to be able to provide a strong audit trail on their spending, increase visibility on government accounts and have greater control over their cash positions. Our engagement with Ministries of Foreign Affairs (MOFAs) globally has revealed the significant potential for efficiency gains through more effective cost management and transparency as they manage a wide array of payments to, and collections from, their diversely located Embassy offices. These transactions are often multilayer, involving several Financial Institutions, including occasionally Central Banks, as funds are moved across borders and finally converted into either more easily tradeable currencies or, at the other end of the scale, more exotic, illiquid currencies. In the current environment, the majority of MOFAs still process, monitor and reconcile these flows in a very manual way, incurring substantial direct and indirect costs that can exceed 5% of the annual budget. These fees are not always immediately visible and are often passed through various financial bodies and countries. Obtaining a holistic, high level view of flows and cash positions is also a huge challenge, as MOFAs often struggle to gain a global view of their financial operations, with delayed reports exposing the entities to increased country and counterparty risks and generating significant economic inefficiencies. The adoption of digital tools, however, can immediately reduce or eliminate these fees, enhance visibility with close-to real time reporting and improve the control over budget management. Through our work with MOFAs we have recently witnessed cases in both developed and developing markets where cost savings of over $30mm over a period of four years was gained through the adoption of such tools. One of our clients has also realized savings of c.4% of their annual budget by simply centralizing their FX conversions at source and leveraging low value channels to move the funds. The adoption of these intuitive and easy to implement solutions has also permitted an immediate boost to visibility and acceleration of account delivery times from several days or weeks to a maximum of two days, without the need to migrate existing Bank accounts. 2. Promoting Increased Operational Efficiency & Accurate Reconciliation While cost is a key driver of automation in the public sector, increased operational efficiency is also important, including more accurate and reliable account reconciliation. Public sector entities are looking for Receivables Solutions which streamline, integrate and lower the cost of payment collections, and permit clear and accurate details on where collections are originating from. Tax Authorities collect domestic taxes, including income tax, Pay As You Earn (payroll), excise duty, value added Tax, withholding tax, customs taxes and road transport taxes. These authorities often have a high level of manual processing which leads to delays in updating taxpayers’ records and slow service provision, delayed and inefficient reconciliation processes and slow refund processes when overpayment occurs. There is a need to automate tax registration and validation on a real-time basis to resolve these issues. Government departments conduct many processes that could be improved through automation.