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How to Tackle the Top 3 Challenges in Business Payments

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How to Tackle the Top 3 Challenges in Business Payments

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Working with multiple systems, the growing threat of fraud, and the lack of visibility into data are the top three challenges treasury professionals face with business payments. That’s according to the Strategic Treasurer 2022 Global Payments Survey of over 230 treasury and payments professionals. 

These challenges are not surprising. The pandemic put the push to digitization into overdrive. However, adding more electronic payment types and digital systems creates more workflows and disparate sources of data to an already complex operation. At the same time, the rise in ACH payments has unleashed a new wave of sophisticated business email-compromise schemes. With so many people changing jobs since the pandemic, these challenges are now even more acute.

What’s perhaps surprising is that these concerns rose to the level of “top challenge” for companies far more frequently than concerns such as maximizing card rebates and vendor discounts, and utilizing different payment types to optimize working capital. 

These are still important, but not nearly as important as making sure the day-to-day process of managing payments works smoothly. These findings of the study square with the top challenges we see working with treasury and payments professionals.

Challenge 1: Using multiple systems

The top challenge, cited by 58% of respondents, is that they’re working with multiple systems. That is difficult when systems are not fully integrated, and just 5% of respondents said their ERP system was fully integrated with their banking platforms. Nearly 90% said there was some integration, while 21% said their ERP system is not connected to their banking platforms at all. 

What we see is that having systems that are not fully integrated means teams find themselves having to run overlapping processes. They’re toggling between systems and exporting data from one system to a spreadsheet and manually uploading it to a different system. 

At the same time, they’re managing a different workflow for each payment type or program. More than 80% of respondents are originating payments with more than one bank. More than 75% use bank portals for payment connectivity, and 48% cite banks’ complex formatting requirements as a challenge.

Challenge 2. Security and fraud management

Preventing fraud is more of a challenge for smaller firms, with 55% citing it as a top concern compared to 36% of those at large firms. What we’re seeing is that smaller companies are experiencing more of these email-based attacks, probably because their systems and processes simply can’t keep up with fraudsters’ pace of innovation. The fear of an attack is greater because the impact to a smaller company is much bigger.

A larger company with a big balance sheet can weather a fraudulent attack more easily, but it can put a real strain on a smaller company. At Corpay, we have processes in place for helping our clients recover fraudulent payments. A lot of small companies can’t afford to lose access to their money for that long. 

Challenge 3: Accessing real-time, accurate data

Getting real-time visibility into payments data seems to have risen in importance, with 43% of respondents saying it is a top challenge. This is perhaps a sign of changed expectations in a world that is becoming increasingly digitized. It wasn’t that long ago that most vendor payments were made by paper check. In that world, real-time visibility was just a pipe dream. 

As the rest of the organization digitizes and decision making becomes more data driven, there’s greater demand to provide more timely financial data. 

But the challenge isn’t confined to slower reporting. Reconciliation takes longer, which means that job costing takes longer. In industries like construction, where costs are passed through to the customer, that means that billing is delayed. That, in turn, creates challenges with cash management. 

What’s interesting is the extent to which the top three challenges are interrelated. It’s hard to deliver timely, accurate data when you’re working with multiple systems and there’s no standardization. The level of complexity that people are managing creates constant time pressure, giving fraudsters an opening to slip in. Furthermore, delayed data can prevent daily reconciliation, which is one of the best practices for catching and recovering fraudulent transactions. 

The linkage between these challenges suggests that the same solution can eliminate many of them. Companies seem to be moving in that direction. The top investment areas are AP automation, which could include invoice and/or payment automation, and payment services. 

Payment automation allows customers to wrap up disparate payment processes and bank connections into a single workflow. AP only needs to transmit one file to the payment provider, and they receive back standardized remittance data. Using APIs, file transmission can be initiated from the ERP system and the remittance data drops right back in there. 

Outsourcing payment services is a more robust solution, encompassing automation, vendor enablement, and data management within a B2B payment network. Payment service providers also handle time-consuming, back-end issues such as error resolution and escheatment. What we typically see with customers who go the outsourcing route is a 75-80% reduction in time spent on payment processing.

There’s a talk track in the profession about turning accounts payable from cost to profit center through increased credit card rebates. The promise of high rebates on spending you’re already doing is attractive. But if your processes are still largely manual and you’re having to hire extra staff to run the process, that can easily cancel out the gain. And it doesn’t position your organization to scale. 

The responses to this survey make it clear that the first order of business is to make sure the process actually works in a scalable, reliable manner with the required protection and visibility. Solutions that address vendor payments holistically and simultaneously streamline complex processes, reduce fraud risk, and give you visibility into the status of all your payments. That, in turn, greatly improves your ability to manage working capital, capture discounts, and make more payments via credit card, thereby increasing rebates and helping you meet your cost cutting goals.

Sven Hinrichsen is SVP of Strategy for Corpay Payables, which enables businesses to spend less through smarter payment methods

 

 

 

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Archives, Banking, Global Trade Daily

Why the Players That Focus on Both Sides Will Win the B2B Payments Market

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Remote work initiatives have created a strong tailwind for digitizing business payments, with companies rushing to move away from checks and onto card and ACH payments. This huge market–roughly 10 times the size of the consumer payment market–is ripe for change. Over the past decade, a decent amount of investment has gone into this area. Everyone is getting into the game: banks, card providers, and fintech providers, for example. It’s very early days, with paper checks still the predominant form of payment in the US. Who will win the market? Ultimately, it will be the players that can best address the needs of both buyers and suppliers.

I’ve spent time on both sides. Before coming to Nvoicepay, which helps automate the payment process on the accounts payable side, I was with Billtrust, which automates accounts receivable. Their founder and CEO, Flint Lane, was a big believer in the need to solve for both sides of the equation. That was my first introduction to the concept. Now, having sold into both accounts receivable and accounts payable, I’m a firm believer as well.

Two Sides of the Coin

There are two sides to every payment—creation and receipt. When it comes to consumer payments, both sides are straightforward, especially with today’s technology. But in the world of business payments, process complexity adds friction between them. Accounts payable’s goal is to manage cash flow by hanging on to money as long as possible. That puts them at odds with accounts receivable, who wants to get paid as quickly as possible. Digitizing transactions doesn’t efficiently address the complexity or friction between the sender’s and receiver’s processes. And the lack of consideration can worsen the issue.

For example, funds sent by accounts payable may hit their vendor’s bank faster with card or ACH payments, but a complicated payment application process can lose the receivable department precious time anyway. Without a way to streamline the process from beginning to end, simply switching to electronic means in a few places may not offer the time savings that businesses hope to achieve.

What’s the Solution?

Portals work well for larger companies that can dictate the terms of doing business to their smaller customers. But their customers may not be happy having their own interests dictated to them. And if you don’t have that kind of authority, chances are your portal will go unused because you’ve created a one-off process for your customers, making life harder for their accounts receivable people.

Electronic means can help accounts payable make payments at the last minute, and they’d prefer paying by card over ACH because they can make money on card rebates. But convincing suppliers to accept card is often a challenge because the accompanying fees can get expensive very quickly. Meanwhile, enabling suppliers for ACH translates to AP managing large amounts of sensitive bank account data.

Many organizations end up “dabbling” in electronic payments because of these enablement challenges. That leaves them managing four different payment workflows–card, ACH, wire, and a whole lot of checks. This is the problem that payment automation providers solve by taking on the supplier enablement process, maximizing card rebates, and simplifying AP workflows.

As much as both sides might agree that digital payments are the future, they’re stuck between a rock and a hard place without automation.

Paving the Way

Fintech businesses like Nvoicepay and Billtrust are bringing automation to payables and receivables separately, and that’s a big step forward. I believe the next generation of solutions will bring both worlds together on a flexible, dynamic platform where both parties to a transaction can choose from a range of options that best meet their needs at any given time.

From an accounts receivable perspective, funds need to be accompanied by enhanced digital remittance information. They could offer buyers incentives in dynamic discounts in exchange for speedy payment and a streamlined cash application process through the platform.

On the buying side, easy access to supply chain financing could allow them to take advantage of such discounts while at the same time extending payment terms. The buying organization takes its two percent discount and gives half a percent to the financing organization, paying the invoice within the discount window. Then the buying organization pays the financing organization in 30 days. Payables manages cash, gets part of the discount and a rebate if they pay by card.

Bringing it All Together

The key to creating these win-win outcomes is including the presence of a technology platform that uses data to offer convenience and choice, allowing organizations to meet whatever their needs happen to be at any given time. For example, if your cash position is good, you may not offer discounts or offer them more selectively. If you work with many small suppliers with tight margins, consider taking the card option off the table.

These are not new ideas, but they haven’t yet been addressed effectively with technology. Historically we’ve tried to do this through EDI (Electronic Data Interchange), a computer-to-computer communication standard developed in the 1960s. It’s always been very clunky, and it is unwieldy for the volume and velocity of data in the supply chain today. However, a majority of organizations still use it for lack of anything better.

Nacha and the Real-Time Payments Network add remittance data to ACH payments, but that’s not a complete answer. There still needs to be some technology put in place to incorporate the data into payment workflows.

Suppose you look at fintech innovation in the consumer payments market as a leading indicator. In that case, it’s been less about new payment products and more about using technology to send and receive money seamlessly, regardless of which electronic network is used.

In B2B payments, fintechs changed the game by thinking about payments as a business process rather than a collection of products, and built software solutions to automate those workflows. With remote work providing an additional incentive, many more organizations are adoping electronic forms of payment. That, in turn, makes data more available to continue developing digital platforms. Whoever gets there first has a good chance of becoming the leading player, but you won’t get there at all if you don’t build for both sides of the equation.

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Derek Halpern is Senior Vice President of Sales for Nvoicepay, a FLEETCOR Company. He has over 20 years of technology sales and leadership experience, including 16 years in the fintech and payments space. 

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Archives, Banking, Global Trade Daily

How Payment Automation Can Positively Transform Your Logistics Company

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Cutting down on your business’ costly, high-effort administrative tasks is always a great idea. Especially when doing so also increases accuracy and limits human errors.

One of the many operational areas where automation can play a positive role in your company is in its accounts payable (AP) departments. 

Despite how incredibly admin-heavy payment processes typically are, AP departments still seem stuck in an outdated paradigm. We get it, though. It feels risky to digitize long-established manual processes. It rocks a boat that feels stable, albeit moving really slowly. But digitization and automation, as scary as it sounds, is an absolute necessity if you want to survive in the world of logistics. 

As we referenced in a previous article on this topic, the AFP reported that 42% of all payments that businesses make still happen by printed checks. This represents a shocking amount of wasted effort. Especially if you consider the many alternatives available to AP departments nowadays.

At the same time, the payment automation industry has matured significantly. As a result, the available solutions in this space have grown in number, capabilities, and reputation. The genuinely exceptional products in this niche are enabled by innovative technology and supported by intuitive workflows. They utilize reliable, secure financial processes. 

Here are some tangible rewards your logistics company will enjoy once you’ve modernized it with one of these automation solutions.

It Speeds up Invoice Approval

According to Stampli, 57% of companies who switched to AP automation did so because it reduces invoice approval time.

In the logistics industry, where businesses rely on the services of many external service providers, unpaid invoices can quickly start piling up. This can cause an admin backlog that’s not only an operational headache to fix but can also have more serious consequences. In extreme cases, unpaid invoices can disrupt supply chains and damage the reputations of both logistics companies and their customers.

Automatic payment solutions typically enable effective workflows that simplify approvals and lower the risk of unpaid invoices falling through the cracks. 

These tools act as a dedicated, real-time communication channel between AP staff and other resources within the company. They also offer digital approval mechanisms that almost entirely remove the need for physical interaction and document handovers.

It Improves Morale and Accuracy

Data entry and invoice management both feature very prominently in Business Insider’s list of organizational morale-killers. 

Unfortunately, the nature of an AP department’s work dictates that these two tasks take up quite a bit of the average clerk’s time. Repetition leads to boredom, and boredom can lead to a lack of focus and mistakes.

This is human nature. Management or incentivization are not sustainable solutions to this inescapable reality of the manual workplace. 

What’s the answer, then? (No prizes for guessing.)

Tools that enable payment automation often include features like automatic data extraction, AI-powered data matching, and character recognition, and automated ledger capturing. 

All of these are excellent alternatives to an analog approach that’s compromised by tedium and an inevitable lack of focus.

It Prevents Payments Being Overlooked

People make mistakes. They forget to do stuff, even things that are a core function of their job. No one is infallible. 

Even when all the necessary details are taken care of, the human being responsible for clicking on the “pay” button or for taking a check to the bank can still simply forget to do so.

The fallout from this little oversight can be significant. Late payments hurt reputations. They can severely disrupt supply chains. And missing out on early-payment discounts can damage cash flows, especially when dealing with large invoice amounts as logistics companies often do.

By design, automated payment systems avoid this scenario entirely. Each tool offers a slew of features that help AP teams make sure payments are made on time. 

It Creates an Additional Source of Usable Data

One of the biggest rewards of being a data-driven company is that strategic decisions can be based on cold, hard facts rather than hunches. 

In a professional environment that’s as cutthroat as logistics, we cannot afford to rely on hunches. No matter how much instinct or insight a manager may have, nothing is going to beat meaningful data when it comes to supporting important decisions.

In all likelihood, your logistics company is already using an operations tool like CarLo, Descartes, and SBT to create meaningful information. You may even be using your CRM, accounting, or HR tools to contribute to the data pool that drives strategy.

This is a great position to be in. The usefulness of data improves dramatically as one combines information from various sources within the organization.

If your AP department is still running on pens, ink, and visits to a bank, it’s creating no digital data. And there’s no way for it to contribute to the data stacks that inform important decisions within the company.

A solid payment automation tool will solve this problem, creating cloud-hosted data that your business intelligence software will easily be able to reference.

In Closing: the Importance of Finding the Right Fit

Not all payment automation solutions are created equal. They differ in terms of price, workflow enablement, technical features, and sensitivity to industry regulations.

That’s why it’s vital for you to do a thorough investigation into the products in this space and choose one that best suits your logistics company. 

Take your time and think through what sets one solution apart from another. Be sure to invest in one that’s not only ideal for the nuances of your industry but also your company’s established workflows and culture.

This is a big decision. The stakes are high. Don’t hesitate to involve your entire AP team to get their input. Each of them will be able to provide unique insights into their daily tasks and advise on how a particular product could help them or hinder them.

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Archives, Banking, Global Trade Daily, Special Reports

Why Credit Cards Could Be the Next Big Opportunity in B2B Payments

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With the advent of widespread remote work, businesses have made impressive leaps in eliminating checks and adopting electronic supplier payments. These changes primarily translated to increasing the number of ACH or Direct Deposit payments made. According to Nacha—the governing body for the ACH network—business-to-business payments for supply chains, supplier payments, bills, and other transfers increased by almost 11% in 2020. But as organizations adopt electronic payment processes, there’s another strategic opportunity for AP to consider: electronic credit card.

Most companies’ payments flow through AP, yet few AP departments today are making significant use of credit cards to their fullest potential. Historically, companies use credit cards as a decentralized way to manage expenses. In order to do their jobs, employees need to spend efficiently, without going through a bureaucratic process. Traditional commercial programs have been focused on companies giving their employees purchasing cards (p-cards) or travel and entertainment cards (T&E cards) which they could use for supplies, meals, or departmental expenses such as software subscriptions, and marketing expenses—items that would be classified as indirect spending. However, while the benefits of these programs are clear, even in a depressed travel environment, it falls short of the full potential of complete credit card utilization.

Old vs. New

Companies can establish guardrails for spending on these cards. They can add controls to limit employee spending or only allow them to spend in certain places. There are also mechanisms in place to do post-transaction reviews and allow for remediation for inappropriate spending. Due to the combination of convenience and control, finance departments often think about cards as tools for employee productivity, with customizable spending controls.

This only touches on one aspect of company spending, however. Companies spend far more of their budget through traditional purchase orders and invoices for direct expenses like materials, components, freight, and labor. The idea that AP could utilize a card for direct expenses has still not been widely accepted.

Cards provide easy access to working capital and offer rewards like cash back or points. Many companies appreciate that cards are a better electronic payment option due to these benefits. The question then becomes: how do you build a successful card program in accounts payable? Generally, businesses have to make card processes work within their pre-existing AP infrastructure, which usually includes a supplier interaction component and a technical component that traditional players (banking institutions) in this space are not fully equipped to handle.

For example, banks primarily look at credit cards as another form of lending. They offer credit lines, which their customers spend against and pay back. Paying supplier by card usually enables businesses to reach their top 10 or 20 suppliers. That’s usually considered a successful lending program, but to interact with more suppliers, integrate with an ERP, or offer enhanced reconciliation data, banks don’t usually have the technical resources, because it’s beyond their traditional lending model.

Incorporating the New

Bank business models usually focus on building and maintaining a vast merchant acceptance network. You can walk into tens of millions of locations worldwide and if they have the Mastercard or Visa logo, you can use your credit card there, no questions asked. But when it comes to payments for suppliers, the acceptance network is inconsistent. Some suppliers don’t accept payment by card, or only accept them from certain customers depending on speed of payment, the margins, and the type of product that they’re selling. Due to these factors, paying by bank-issued card requires the vendor engagement process to include finding suppliers that already accept specific card types, ensure they accept that payment type from other customers, and locate new card-accepting suppliers.

That’s where fintechs really shine, because their business models are built to incorporate a supplier engagement process aimed at getting more spend on cards. Where banks generally looking for the top 10 to 20 suppliers, which might account for 70 percent of your total spend, fintechs go after the tail—that 30 percent of spend that probably accounts for more than 60 percent of your suppliers and takes more work to get on board. Essentially, they build out a B2B acceptance network inside the credit card acceptance network.

Scaling the Mountain Towards Change

Operationalized re-engagement models are a particularly important component of this business model because most companies churn 10 to 20 percent of their suppliers each year. Within two years, business’ supplier pools are different by 20 percent from when they began, so they must reach out constantly to maintain certain payment acceptances. While banks don’t always have the capacity to offer supplier acceptance maintenance, fintechs thrive when they include those services in their business model.

There are multiple benefits of capturing tail spend on cards. For example, doing so opens the door to paying more suppliers electronically, earning businesses more working capital and a higher potential for rebates. Virtual cards come with security and controls that plastic cards do not usually possess, including single-use numbers that are tied to unique suppliers and payment amounts. Tag on reconciliation data options, and the system becomes something that benefits accounts receivable as much as accounts payable. This opens more suppliers up to the idea of accepting electronic forms of payment.

Fintechs—technology-focused by nature—build their systems with a holistic viewpoint in mind, preferring to create software that doesn’t sacrifice one business’ operations for another’s. By enhancing the system end-to-end, previously reluctant accounts receivable teams, who felt strong-armed into giving up outdated payment processes, often become more willing and interested to learn about electronic alternatives.

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Rick Fletcher is the Comdata President of Corporate Payments, where he specializes in sales, marketing and product strategy, operations, and customer service.

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Nium Announces Launch of Global Digitized Payment Solution for Maritime Companies

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Nium recently announced the launch of its maritime payment solution, focusing on digitized payment options for shipping companies, management, seafarers, and their families. According to information released by the leading global payments platform, the payment solution – known as the Nium Pay app, utilizes the company’s global license network to successfully integrate the technology stack for real-time payroll disbursements, vendor payments, eWallet services, and remittances.

Bernhard Schulte Shipmanagement (BSM), integrated maritime service leader, is the first to use Nium’s maritime payment solution for their Spend Management Process. The solution includes the launch of BSM branded multi-currency Visa debit cards and eWallet services for their seafarer population. This also includes a supplementary Visa card available for the seafarer’s families.

“Technology development in the shipping industry is accelerating as shipping companies and their seafarers seek modern ways of moving money,” said Gitesh Athavale, Head of Sales, South East Asia and Hong Kong. “Our maritime payments solution provides an efficient and cost-saving way for shipping company management to digitalize payments, including disbursing payroll and making vendor payments. Their seafarers benefit from a convenient and modern way to send and receive money simply or spend it on board – all through the convenience of one simple app.”

The Nium Pay app allows shipping companies to disburse salary payouts directly to seafarers’ virtual visa card accounts. Crew members can directly access their wages from anywhere in the world while at sea or inland, send money overseas, process card to card transfers, shop online, and use their Nium Virtual Cards with mobile wallets onboard through the Nium Payment Application.

“It is important to us that our crew and their families are well taken care of, especially during these uncertain times when our crews are not allowed to go ashore and cannot physically remit funds back home,” shared BSM Finance Manager, Dennis Moehlmann. “Now with this new digital payment solution from Nium, no matter which part of the world our crews are at in that moment, funds can be transferred in an instant and their families will receive the transferred money immediately on their supplementary card or their home account. This is the peace of mind we want to give to our crew.”

Through this application, Nium approaches traditional payment issues for maritime companies by combining its “Pay In” and “Pay Out” capabilities. This enables shipping companies to:

-Reduce or even eliminate the use of cash on ships through QR payments

-Launch branded e-wallets with Card Payments, Remittance, Multi Currency functionality and Travel Insurance services

-Apply exclusive rates for inter and intra company cross-border payments (fund transfers can be done regardless of Internet connectivity)

-Comply with payroll and delivery and international banking regulations, including Philippines’ Overseas Employment Administration (POEA) ruling regarding seafarer payments

-Easily track remittance payments

-Send payments in real-time

Additionally, Pay-Outs are currently being offered to more than 100 countries, of which, 65+ in real-time, available to bank accounts, Visa/UnionPay cards, and AliPay wallets.

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Archives, Banking, Global Trade Daily

HOW TO BETTER PREPARE PAYMENTS FOR FUTURE DISRUPTIONS

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A particularly virulent and nasty airborne virus, it has so far accounted for 2.5 million deaths worldwide with more than 110 million cases recorded at the time of writing. Given these numbers only represent reported incidences, the real tolls could well be substantially higher.

The pandemic has especially caught western societies on the backfoot. Unlike regions more used to infectious disease outbreaks such as Asia and Africa, the likes of Europe and North America have not had to deal with a public health threat of this kind since the Spanish flu disaster of 1918, a four-wave pandemic which is thought to have killed 675,000 people in the USA and 50 million worldwide.

Vaccinations are key to emerging from the worst of the crisis during 2021, both in terms of public health and the economy.

Regarding the latter, COVID-19 has been nothing short of a disaster. America has disproportionately suffered from the coronavirus: Not only does it have the highest registered death toll, but it is also forecast to lose trillions of dollars in revenue.

Predicting the size of the economic fallout is far from straightforward, and estimates vary tremendously.

According to a study by the University of Southern California, anywhere between $3 trillion and $5 trillion could be lost over the next two years, while economists at Harvard believe the pandemic will cost the U.S. $16 trillion, assuming it is over by this fall.

While uncertainty remains as to the exact extent of the financial damage, what cannot be denied is that the financial losses are and will continue to be enormous for years to come.

The second quarter of 2020 saw real gross domestic product in the U.S. decrease at an annual rate of 31.7 percent, the largest quarterly plunge in activity on record.

And one of the most worrying patterns emerging from 2020 is companies struggling to manage cashflows and stay afloat. Payments simply are not flowing through supply chains as they ordinarily would, an observation which is borne out by several reports and surveys.

For example, trade credit insurer Atradius reports in its annual Payment Practices Barometer that businesses across the USA, Canada and Mexico are facing widespread cash and liquidity pressures. Meanwhile, business credit information firm Cortera reported that in May 2020, large companies with more than 500 employees paid their suppliers 15.6 days late on average, up from around 10 days a year earlier.

Responding to economic disruption

So, how can companies safeguard themselves against this sort of financial disruption both now and in the future?

Paying particular attention to cash flow during times of crisis is essential if businesses are to emerge from this black swan event intact–even those that appear to be in strong financial shape, given the longevity of the demand and supply chain disruption being witnessed.

At the start of the pandemic, around March 2020, Deloitte released a series of advice papers on how supply chains can cope with the then anticipated fallout, one of these being “COVID-19: Managing cash flow during a period of crisis.”

“Given the importance of cash flow in times like this, companies should immediately develop a treasury plan for cash management as part of their overall business risk and continuity plans,” the report states. “In doing so, it is essential to take a full ecosystem and end-to-end supply chain perspective, as the approaches you take to manage cash will have implications for not only your business but also for your customers.”

Deloitte draws on lessons learned from the 2003 SARS epidemic, the 2008 global financial crash, and the 2011 Japanese earthquake, offering 15 specific practices and strategies for companies to better manage their cash flow.

15 ways to better manage your cashflow

1. Ensure you have a robust framework for managing supply chain risk.

2. Ensure your own financing remains viable.

3. Focus on the cash-to-cash conversion cycle.

4. Think like a CFO, across the organization.

5. Revisit your variable costs.

6. Revisit capital investment plans.

7. Focus on inventory management.

8. Extend payables, intelligently.

9. Manage and expedite receivables.

10. Consider alternate supply chain financing options.

11. Audit payables and receivables transactions.

12. Understand your business interruption insurance.

13. Consider alternate or non-traditional revenue streams.

14. Convert fixed to variable costs, where possible.

15. Think beyond your four walls.

*Source – Deloitte, “COVID-19: Managing cash flow during a period of crisis”

Among them is advice to extend payables–in other words, take longer to pay suppliers. However, Deloitte warns against delaying payments without prior agreement with customers, urging dialogue between both parties to ensure the supply chain is as minimally disrupted as possible.

Indeed, companies may wish to bring forward payments to suppliers if it prevents them from going out of business, the consequences of which being far costlier than using up some of your own cash reserves early.

As a supplier, offering dynamic discounting solutions for those able to pay more quickly could be a way to improve your cash flows; by using this technique, you are essentially paying customers to provide you with short-term financing. Going down this route could be expensive in the long term, but it could be the only viable option if other financing methods are not available.

Perhaps the most important, albeit least tangible piece of advice is to think outside of the confines of your own business. Rather than simply focus on your own operations, companies should think about how their actions will impact the wider supply chain ecosystem.

A further question revolves around the ways in which payments are being made.

COVID-19 has accelerated the adoption of digital and automated payment methods. For instance, according to research by digital transformation platform MX, there has been a rise in mobile banking engagement of 50 percent since the end of 2019.

The U.S. has been behind the curve on supply chain financing for quite some time. Widescale adoption of electronic, data-driven invoicing will create fluidity and working capital for both suppliers and buyers.

Responding to social disruption

Another dynamic to consider is how to mitigate social disruption.

There is already evidence that the COVID-19 pandemic has rekindled divisions within society–black and ethnic minorities are disproportionately affected by the virus, while the poorest have been hit hardest by the financial costs of lockdown policies.

While not being ostensibly linked to coronavirus, the traction gained by the Black Lives Matter movement in the U.S. has undoubtedly been heightened in the pandemic’s context.

It has also prompted major shifts in consumer and business circles: Citizens and enterprises are putting time and capital towards prioritizing diversity and inclusion.

“Supplier diversity initiatives are no exception,” states supply chain software provider GEP in its 2021 Outlook. “In 2021, procurement and supply chain leaders will need to do more–by developing new approaches to include minority-owned businesses to achieve real targets for supplier diversity.”

Indeed, hardwiring diversity and inclusion into the procure-to-pay process will help organizations respond to the social unrest of 2020. This will involve tracking and benchmarking metrics at a transactional level, and companies can start by focusing on direct spending with small and diverse suppliers.

Going back to Deloitte’s advice on thinking beyond your four walls, businesses should also monitor the revenue growth of their suppliers in order to fully assess the impact of their supplier diversity and inclusion strategies.

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Archives, Banking, Global Trade Daily

The Road Towards Digital Payments During the Pandemic

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The contactless payment market is estimated to surge during the global crises of the coronavirus disease owing to the need to maintain social distancing. Apart from this, the rise in technology, fast and easier payment methods, and network coverage have also impacted the contactless payment market during the pandemic.

‘Where did we come from and where are we going?’ is a famous line from Dan Brown’s book called ‘Origin’. This book signifies the importance of technology and its role in answering the question of ‘where are we going’. Digitization and technology will soon one day become the next element of planet earth. The roots of which have been planted in today’s time, especially in the Covid-19 pandemic. One important aspect of digitization is the economy and money transactions associated with it, paving way for the contactless payment market amidst the coronavirus pandemic.

What is Contactless Payment?

This is a secure method of payment that utilizes technologies like radio frequency identification (RFID) and near-field communication (NFC) for transactions. The name itself suggests that all forms of money exchanges will be carried out in a non-contact way. The only way to do that is by using digital methods of payments.

Some of the popular contactless payment methods are smartcards, credit/debit cards, Google pay, Apple Pay, and many more. Credit/debit cards are used with RFIDs, also called chip cards, that eliminates the necessity to swipe or enter a pin code. Contactless payment is not a new concept but its prominence has augmented due to the Covid-19 pandemic. For instance, in November 2018, RBI replaced all magnetic stripe-only cards to EMV chips and also started a second-factor authentication (PIN) for transactions up to INR 2,000/-.

How has Covid-19 Outbreak Impacted the Global Contactless Payment Market?

According to a report published by Research Dive, the global contactless payment market is anticipated to garner revenue of $20,340.3 million by 2026. The fear of getting infected has pushed people to opt for contactless payment, for instance, almost 79% of the MasterCard users preferred contactless payments during the pandemic period. This is a sign that the contactless payment market has enhanced during the Covid-19 crisis. The idea to turn India into a cashless economy post demonetization has been augmented in 2020.

The traditional methods of payment are fading away in today’s time; however, the geriatric population and the marginalized section of the society are still lagging in digital payment methods. In the current situation, it is essential to maintain distance and avoid infection from spreading. According to WHO, viruses can stay on cash for several days after exposure; thus contactless payment seems a better choice for now.

Apart from this, there was a 40% ‘year-to-year’ rise in contactless payment globally from January to March 2020. In fact, countries like Germany and China also experienced growth in digital payments during the pandemic. The major driving factors responsible for the contactless payment market growth are the usage of mobile phones and strong internet connectivity.

Online transactions can be risky due to cyber thefts, frauds, and scams but contactless payment has minimized these dangers by using magnetic strips at the back of the cards and all the information is automatically encrypted during transactions. Apart from this, biometrics usages such as iris recognition and transaction limits prevent fraud as well.

The contactless payment market is in demand due to advance technological changes such as artificial intelligence-based voice payments and wireless technology. These technologies directly connect debit/credit cards to fitness trackers, phones, and smartwatches for payments via Google pay or Apple pay.

Several countries are applying innovative strategies for boosting contactless payment, for example, AIB bank of Ireland suspended all charges on contactless payments for encouraging people to take up this mode of payment. Furthermore, retailers have reported a 69% rise in contactless payment since January 2020 due to an increase in online orders as per a study conducted by Forrester Research.

Social distancing norms are the only reason behind the growth of the contactless payment market that ascertains fast and simple transactions.

Future Scope of the Contactless Payment Market:

The contactless payment market will continue to grow in the post-pandemic world as well due to strategies, product launches, and collaborations applied by the market players. For instance, the partnership of SBI and Titan has devised contactless payment services via watches called Titan pay. This mode of payment rules out the option of card swiping or inserting pins and is available for all the people using MasterCard.

Another example of fruitful collaboration is that of Samsung and Curve that have launched Samsung pay in the market. This mode of transaction provides features like peer-to-peer payments, notifications on money spent, and switch payment sources retroactivity.

It’s pretty clear from the above deductions that the Covid-19 pandemic will leave a long-lasting impact on the contactless payment market, economy, and banking sectors.

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Chaitali Avadhani is currently working in the content writing industry and has a Master’s degree in journalism and mass communications from Savitribai Phule Pune University. She is naturally attracted towards writing and is harboring experiences in the same field. Apart from this, she is a certified mountaineer and has passed out from Himalayan Mountaineering Institute, Darjeeling. Outside the office she is actively engaged in fitness activities such as running, cycling, and trekking.

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LATEST: 2020 is Shifting the B2B Payments Scene

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B2B payments have historically been slow to adapt to automated payments but COVID may be the vehicle to forever change how business payments are processed. Josh Cyphers, President of Nvoicepay, a FLEETCOR company that transforms the way firms pay their suppliers, provides insights into the changes and trends businesses are experiencing in B2B and mobile payments and how it’s impacting businesses moving forward.

What are some of the big trends driving B2B payments?

Paper checks still reign supreme in B2B payments, but COVID has created a compelling event that is really pushing companies toward fully automating payments. This is a big shift. Over the course of the last 10 to 15 years, check use has been ticking down ever so slowly. According to the 2019 AFP Electronic Payments Survey Report, organizations made 42 percent of their supplier payments by check in 2019, down from 81 percent in 2004.

Now that accounts payable departments are working remotely, companies are trying to minimize the amount of manual work that requires trips to the office, or to employee’s homes to get them to sign checks. Suppliers are asking to be paid electronically because they get the money faster and they don’t have to go to the bank. It will be interesting to see the 2020 AFP report and see if the pandemic pushes organizations to finally give up checks.

The other thing that’s happening is an extreme focus on managing cash. Given the economic environment we’re in, a lot of companies are looking for ways to conserve cash. They’re looking at the timing of payments; extending payment terms to suppliers or delaying payments. With an automated solution, all of the payment approvals and workflow are online, and you have visibility into every payment as it moves through the system, and that gives you precision control over cash flow.

What are some innovations you’ve noticed in contactless payments lately?

In B2B payments, I would define contactless as not having to do manual work. Cloud-based software is enabling accounts payable departments to automate work they’ve previously had to do manually. That includes the handling of paper checks but also a lot of the work that goes into electronic payments as they’ve historically been done through banks. For example, if you want to do ACH payments, you have to pick up the phone or send out emails and collect suppliers’ banking information and probably manually key that into a system. For card payments, you have to phone or email to find out who will take a card payment, and then you might have to phone the supplier with the card number, and then they enter it into a terminal. There’s a surprising amount of manual work that has to be done to get the funds to move electronically through the banking system.

The cloud is what is enabling payment automation providers to transform that disjointed process, with all its manual touchpoints, into a single automated workflow.

 

The cloud also makes implementation very fast and easy, so automating payments is something that an organization can now accomplish in a matter of weeks.

How has COVID impacted mobile payments?

Having a cloud-based solution allows accounts payable professionals to make payments anytime, anywhere. But up until COVID, that kind of mobile capability was a nice to have, not a must-have for business payments. I’ve never in my finance career seen an AP team that was completely remote. With everyone in the office, mobile just wasn’t a consideration. The construction industry is one exception; in that industry, many of the people who approve payments are out in the field, so mobile capabilities are a real selling point for a payment solution. Now that AP teams have been out of the office, every industry is looking for payment solutions that allow them to work remotely as much as possible.

What do you see as the biggest future trend for mobile payments?

B2B payments are about ten times as big as consumer payments, yet the adoption of cloud-based solutions is still in the single digits. Given the size of the market, the adoption of mobile payments by businesses is a big trend in and of itself.

Mobile payments have changed consumer life by making payment so easy and convenient that you hardly have to think about it. That has had a huge impact on how we live our lives and has really sped up commerce and increased our options. When you think about that same kind of frictionless, mobile payment experience becoming widespread in the business world, which it inevitably will, I think it will fuel all kinds of innovation and change.

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Josh Cyphers is the President of Nvoicepay, a FLEETCOR Company. For the past 20 years, Josh has managed successful growth for a variety of companies, from start-ups to Fortune 100 companies. Prior to Nvoicepay, Josh held leadership roles at Microsoft, Nike, Fiserv, and several growth-stage technology companies. Josh is a lapsed CPA, and has a BS in Economics from Eastern Oregon University.

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AI and Cryptocurrency – How They Can Work Together Effectively

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There will soon come a time when artificial intelligence will be running on top of cryptocurrency systems like Blockchains with its capability to increase machine learning capacity and create new financial products. It will take the technology leaps and bounds further in making it one of the mainstream emerging technologies.

According to the research being conducted about the future of AI, the market is estimated to grow to a whopping $190 billion worth of industry by 2025. Considering how much the market is expected to grow, Blockchain and AI convergence are inevitable.

Both the emerging technologies have been around for a decade now and deal with data and value. Where Blockchain enables a secure storage and sharing path of data, AI analyzes and generates significant insights from data to create value.

Having such similarities, there is no doubt that both the technological realms can be merged to create a more advanced and efficient machine learning blockchain system to benefit the masses. Let’s have a look at how Blockchain and AI are a perfect match.

How Blockchain and AI Is the Perfect Match

The following are some key pointers and examples that evidently showcase how combining Blockchain and AI is a consequent step forward in the right direction for increased efficiency and profitability.

Blockchain connecting with the AI basics

Firstly, it is essential to know that most of the hype surrounding startups integrating Blockchain with artificial intelligence is exactly just that, hype. Such companies are far too young and inexperienced in the industry to be talking about a big game. With few clients and less commercialization, it is understandably not possible to carry out such advance convergence.

The majority of such companies have raised money through the initial coin offering or the ICO. This means that the solutions they offer are as thoroughly evaluated as they would have been had the company raised a significant amount of venture capital money.

However, it is quite so possible that these companies may become successful in the future, but until then, they just create useless hype about the advancements in this technology.

Many people limit the usage of Blockchain technology and associate it with just cryptocurrency transactions. As a digital ledger that can record economic transactions, Blockchain can be expanded to virtually record almost anything of value.

There can be both public and private blockchains. Where the public ones are open to the public, the private or ‘Permissioned’ blockchains are restricted for usage by ‘invitation-only’ and mainly used in the corporate environment. This also makes them faster than public forums as the users are mainly trusted and verified personnel making the transactions verifiable faster.

One of Blockchain’s more important features is that it allows even the unrelated parties to carry out a transaction and share data through a mutual ledger. As cryptography validates the transactions, it makes it more efficient for participants not to rely on third-party evaluators to carry out a transaction. Deploying cryptography ensures that data transactions are secure, incorruptible, and irreversible once recorded.

Artificial Intelligence is not a term making rounds for a decade now. It very much comprises of every new technology that has near-human intelligence to carry out a task. AI models are used to assess, understand, classify, and predict using relevant data sets. Machine learning then cleanses the data as it gathers insights creating better useful data sets for use.

As it is evident, data is the central component to AI and Blockchain that allows a secure and collaborative effort towards data sharing. Both Blockchain and AI ensure the trustworthiness of data and extract valuable insights from it.

How Microsoft is Improving Machine Learning for Blockchain

According to the research conducted at Microsoft, the company is working on finding out ways to design efficient collaborative machine learning models hosted on public blockchains. The incentive behind this effort is to make AI decentralized and a more collaborative forum using Blockchain.

While there is no doubt that advances are being made in machine learning, the benefits that are being created as the results of these efforts are not as openly available. The masses have limited resources and cannot always access cutting-edge technology such as machine learning systems.

Such systems are highly centralized and used as the proprietary datasets. Not only are they costly to recreate, but even the best models can become outdated if not consistently refreshed with new data.

The idea is to allow advanced AI models and bigger datasets to be easily accessible, sharable, updated and retrained to increase the adoption, acceptance, and overall effectiveness of AI. People will soon be able to adopt this easy and cost-effective method to run and access advanced machine learning models through regular devices such as laptops and smartphone browsers and collectively participate in improving data sets and models.

Therefore, Microsoft is keen on developing what they call a Decentralized & Collaborative AI on the Blockchain framework. It will significantly increase AI community collaborations to retrain such models with valuable datasets on public blockchains. The machine learning models would be made free for public use as they would know the code they are interacting with.

Some applications that Microsoft is looking forward to integrating are virtual assistants and recommender systems like used by Netflix to recommend shows to its audience. Considering such models, Blockchain makes sense because of the increased security and how trustworthy it is for the participants.

The well-established nature of the blockchain system and the associate smart contracts ensure that the models will always perform up to the specific requirement. As the models are consistently updated on the Blockchain used unhinged by the user’s local device, every user gets to see the one genuine version of the model.

Hence, even though Microsoft’s framework isn’t favorable for operating at large scale for now, but sooner or later, it will be the norm. There is little to no doubt that organizations like Microsoft are doing advanced research and practical work to converge AI and cryptosystems like Blockchain. There is no doubt that cryptocurrency is the future of money. So it is in the best interests of the organization to start working on merging Blockchain and AI for improved benefits.

How can an organization merge Blockchain and AI?

Just as Microsoft, more advancement is made for combining Blockchain and AI for fulfilling specific usage requirements. Such cases will depend on the company’s specific needs, but the core preference would be related to data. This will allow companies to improve their digital and data capabilities by developing a combination of AI and Blockchain solution to fit their operations.

The very first step needs to be taken by the executives to identify the specific business needs and whether creating an AI and Blockchain system would address that need. This can become easier if the organization has already worked on AI and taken initiatives in other operations because now you can integrate Blockchain to improve them.

Similarly, if the company owns valuable data, they can monetize by converging a blockchain environment and sharing the data with AI model creators. For instance, a progressive car company like Tesla probably has a good collection of valuable data collected by its cars. They can put it on a blockchain system as their self-driving cars will continue to collect huge amounts of data that they can use to improve the neural networks powering self-driving operations and functions.

With a trusted name as Tesla, the public would not be too complacent about maintaining their privacy. Blockchain would allow the company to make the driver information anonymous to ensure privacy while collecting data to improve neural nets in use.

The company can even share anonymous data with car insurance companies. It would allow the insurers to price their insurance packages for self-driving cars more efficiently and with an educated mind, given how the risk profile of a self-driving car is different from that of a regular car.

The whole packaged win-win situation here is that where the company would improve its cars, the public would get advanced transportation, complete privacy, and the right insurance for the right price without getting exploited.

Using Digital Investment Assets for Trading through Blockchain

You must be already aware of how Blockchain is already a ready-made, and good-to-go digital ledger used to store and trade financial instruments such as cryptocurrencies and cryptographic tokens. However, Blockchain is still a nascent technology, been only around for a few years. Where cryptocurrency has definitely taken the world by storm, cryptographic tokens are comparatively more nascent.

Hence, it is evident that there is no probable activity and enough data yet to apply AI to financial products like a cryptocurrency that are traded through Blockchain. However, the upgrading technology and data sets show a promising future for AI taking insights from these data sets to create financial products and trade them autonomously.

How can an organization merge Blockchain and AI?

The convergence of artificial intelligence and Blockchain would be a huge step forward, and the process will cover four distinct yet inter-linked stages.

Stage I: Proof of concepts

Stage II: Asset tokenization

Stage III: Digital Investment Assets DIA

Stage IV: AI agents trading DIA

The four stages will represent how Blockchain is proof of concepts initially. On the second stage, assets are tokenized and traded. Tokens can represent underlying security methods, physical assets, cash flows, and utilities. This reduces the alleged transaction cost and decreases the time taken for settlement to improve audit accountability.

AI and Blockchain Applications

There is no denying that a decade back if someone would have presented us with an idea of magical internet money called crypto in the future, we would have laughed and made fun of the person for coming up with Superman and Kryptonite theories. Fast forward to ten years down the line, and cryptocurrency not only exists, but there are real-world integrations of its blockchain system with AI.

Smart computing power

Think of a machine learning code that would upgrade and retrain when given the right data. That is exactly what AI affords the users to tackle tasks more efficiently and intelligently.

Diverse data sets

The combination of Blockchain and AI can create smarter and decentralized networks to host various data sets. Creating a blockchain API would enable the intercommunication of AI agents resulting in diverse codes and algorithms to be built upon diver data sets, ensuring development.

Data protection

It doesn’t matter if data is medical or financial. Certain data types are too sensitive to be handled by a single company and their coding system. Storing such data on a blockchain and accessed through AI would give its users a huge advantage of personalized recommendations, suggestions, and notifications while securely storing data.

Data monetization

Data monetization would make both AI and advance Blockchain easily accessible to smaller companies. As of now, developing and growing AI is costly for organizations, especially those who do not own data sets. A decentralized market would create space such companies for which it is otherwise too expensive.

Trusting AI for decision making

AI is growing smarter with time. Through the use of blockchain systems like crypto, transactions will become smarter, making the process easier to audit.

Conclusion

All in all, the collaborative effort of blockchain technology and AI is still majorly an undiscovered territory. One of the main reasons why we still have yet to see a commercialized joint adoption of the Blockchain system and artificial intelligence is that the upscale implementation of their convergence is quite challenging.

Many businesses, although having ventured on with AI, are skeptical when it comes to conjoining Blockchain. They are in their early stages for testing the waters for AI and Blockchain coming together in isolation. As they continue to figure it out for appropriate public distribution, the convergence of the two technologies has had its fair share of scholarly attention as well. Yet still, projects solely developed to promote the groundbreaking match are still primarily not catered to.

There is no doubt that the potential of this combination is clearly there and developing, but how it will play out for future public use can be anybody’s call.

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Claudia Jeffrey is currently working as a Junior Finance advisor at Crowd Writer, an excellent platform to get assignment help UK. She is a self-proclaimed crypto-influencer. She has gained significant expertise and knowledge in this regard over the years and likes to share it with an interested audience.

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Bitcoin Has Gained Legitimacy in 2020

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Throughout its brief but exciting existence, bitcoin has had its detractors. For every enthusiast predicting soaring values or a shift in the very concept of money, there has always been a critic suggesting that bitcoin is fundamentally worthless, or that we can’t trust blockchain technology. For the most part, the breadth of the spectrum between proponents and detractors has always been understandable, because bitcoin is still new and it has always been volatile. This year has painted a different picture though. All of a sudden, bitcoin is beginning to look more legitimate than ever.

This is largely thanks to how the asset has responded to the coronavirus pandemic and ensuing financial crises around the world. Early on, there were quick-trigger takes suggesting that bitcoin had actually failed this test — that its long-hoped-for potential as a safe haven had fallen flat, and it had simply crashed alongside other assets and markets around the world. It didn’t take long, though, for bitcoin to reverse this narrative. While it did indeed experience a sharp and troubling crash, it followed with a far more rapid recovery than most other valuable assets or commodities. Bitcoin was over $10,000 in the blink of an eye, relatively speaking — after falling down around $5,000 in March. At least in this instance, it was a safe haven for those patient enough to withstand the dip.

There is also a feeling of growing legitimacy connected to bitcoin’s sudden stabilization. As noted, bitcoin is historically volatile, and this is partly responsible for the polarized opinions and outlooks it inspires. Since the “halvening” event in late May though (during which the amount of bitcoin acquired in each mining block is reduced by half), bitcoin price movements have been almost minute. There were no sharp gains or losses throughout the month of June, and in that same span, the price was kept almost entirely above $9,000. In recent days, bitcoin has actually spiked upward again, making for its most dramatic movement since early May — but that’s not exactly a bad thing, and the key takeaway from the summer has been a reduction in volatility. This is reassuring for a lot of traders and analysts.

Beyond the positive and stable response to events this past spring, bitcoin may be enjoying a further boost in legitimacy as a result of governments’ and financial institutions’ increasing willingness to explore digital payments. To be clear, most of these governments and institutions are not explicitly working with bitcoin. However, when people hear about major banks adopting blockchain transactions, or the People’s Bank of China launching a digital currency, it supports the idea that bitcoin works, and that digital currency is the future. Even if these changes are ultimately producing competitors, they’re helping to validate its core concept.

We’ll note in closing that there are still plenty of negatives people will ascribe to cryptocurrency. Bitcoin’s pros and cons are fairly baked in at this point; some will always dismiss it because it’s expensive or complicated, or because an alternative is more appealing. But the idea that bitcoin is worthless or illegitimate may finally be fading as a result of what we’ve seen this year.