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Financial Transformation Breakthrough: Are You Starting Too Big?

fintech

Financial Transformation Breakthrough: Are You Starting Too Big?

In their article on the a16z blog, “The CFO in Crisis Mode: Modern Times Call for New Tools,” Seema Amble and Angela Strange call for a new round of financial technology (fintech) innovation aimed at the corporate finance function. They envision a future in which fintechs deliver intelligent solutions that rely on data capture across the enterprise. They also recommend ways that companies can make better financial decisions. It sounds like a worthy effort. As they point out, today’s CFO is expected to be highly strategic. But does that always have to mean undertaking Transformation with a capital “T?” Right now, it might be better to focus on opportunities for incremental change.

A recent survey of 225 CFOs at global companies found that nearly half have not completed any digital transformations. There are still significant efforts devoted to manual transactions in most finance departments—such as sending payments. Only a relatively small effort is going towards strategy, as Amble and Strange perfectly illustrate with the above image.

It’s not for lack of budget. According to the survey, the two greatest challenges to digital transformation are a lack of technological skills and internal resistance to change. Budget issues were the lowest-rated challenge.

To overcome those challenges, companies create titles like Director of Finance Transformation, Global Finance Digital Transformation, and Senior Program Manager for Finance Transformation. The people in these roles specialize in upgrading their businesses as simply and non-invasively as possible.

The Meaning of Transformation

If you look up synonyms for the word’ transformation,’ they include ‘metamorphosis,’ ‘revolution,’ and ‘radical change.’ The problem is that when people think about introducing new technology to finance this way, they tend to think about solving big problems at the top of the pyramid—for example, their ERP solution. When they’ve exploited that as much as they can, they move down the pyramid. They’re primed for Transformation (with a capital ‘T’) to be massive and arduous and disruptive, that they’ve missed the smaller, transformative opportunities that aren’t nearly as disruptive. I have yet to see a title like Senior Director of Incremental Change on LinkedIn, but maybe there should be. Incremental change is a lot easier, and it can have an outsized impact.

Those opportunities are found at the bottom of the pyramid, where people are mired in small, tedious problems that add up—especially as a company grows and adds headcount. Opportunities here tend not to attract the attention of the Transformation crowd because of their size. They’re not viewed as strategic. Automating payments is one such opportunity at this level, and fintechs are already on it.

There’s a huge amount of manual effort that goes into making payments. It’s not just the writing of checks; it’s enabling suppliers, making supplier data changes, reconciling, and resolving payment errors. Taking advantage of the right fintech software can reduce the effort it takes to maintain these projects—and with just a few hours of IT time.

There’s little or no integration required—all you need is a payment file from your ERP or accounting system to map to. The right fintech partner will do that mapping, as well as most of the project’s heavy lifting.

By adopting this technology, companies go a long way toward shrinking the heavy foundation at the bottom of the pyramid and redirecting that effort toward more strategic initiatives.

Regaining Control

It’s not just about reducing or eliminating manual transactions. It’s also about visibility and control.

Every finance leader is hyper-focused on cash management. Cloud-based payment automation shows you where your liabilities are and simplifies the payment process—one that only requires a few clicks of the mouse. You have full visibility into the entire payment flow, regardless of payment type, at all times. Payment data is consolidated into an electronic format, so it’s easier to present the information to company leadership, FP&A, and auditors.

It’s time to think smaller and start at the bottom of the pyramid. We don’t have to wait for the next wave of fintech innovation. Companies can cut the time and cost of making payments by about 70 percent by chipping away at the pyramid’s lower sections. There are also opportunities to relieve your team from the worry of payment fraud while turning accounts payable into a revenue generator.

Understanding What’s Available

Very few people know about fintech payment automation or really understand what it does for their back-office operations. Market penetration is still in the single digits, and most companies make payments the old-fashioned way—by sending payments directly through their banks.

It’s hard to believe change can be so easy. Perhaps it’s because we associate change with a need for a seven-figure budget, an army and consultants, and a year of dedicated time. But that’s not necessarily the case anymore. If I could sidle up to these Directors of Finance Transformation, I’d ask them: “Are you looking for ways to increase throughput and reduce risk without upending everyone’s current processes? Have I got a project for you.”

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Lynn Bancroft is a Relationship Manager with Nvoicepay and is dedicated to building strong relationships with enterprise customers.

supplier

Why is the Supplier Experience Important in Payment Automation?

It’s a difficult time to be a supplier. As companies conserve cash amid difficult economic conditions, suppliers are often the ones who feel the financial strain. Payment terms get extended. Buyers seek to renegotiate contracts to optimize their processes and adapt to new solutions. But then their suppliers are left out of the discussion until they’re presented with their marching orders.

Even though a company’s first responsibility is to its bottom line, it cannot afford to forget that suppliers are ultimately responsible for their ability to deliver revenue. It’s especially important right now that companies take care of their suppliers for the supplier’s benefit as well as their own.

Nightmare Scenarios

If suppliers don’t get paid in a way that works well in their processes and systems, it causes many nightmares for their accounts receivable team. Those nightmares can spread throughout the organization, causing stress and frustration. That frustration sometimes manifests as a conflict between buyers and suppliers. In my prior finance roles, I saw my fair share of suppliers who went to great lengths to make their dissatisfaction known, from verbally assaulting my unsuspecting colleagues to threatening lawsuits.

When suppliers go to these lengths, it’s because they’re desperate for action on the buyer’s part. In today’s environment, their distress is twofold. Payment amounts that seem negligible to buyers make a significant difference to suppliers. The constant flow of payments from AP to AR teams has slowed as companies conserve their funds as long as possible. The ebb and flow of this process has always been present—it’s how many companies do business. But this year, suppliers are feeling the strain more than usual.

Increased Collection Pressure

In 2001 and during the Great Recession, we saw that when the economy struggles, finance departments add aggressive collections specialists to their accounts receivable teams to collect overdue money from their customers, relationships aside.

In my experience, AP people are helpful, conscientious, and tough. They have to be, as the liaison between their company and its suppliers. Right now, they’re on the front lines, battling to conserve cash. If past downturns are any indication, they’re currently bogged down with calls, and morale is dipping as the number of irate callers spikes. What’s worse, that stress and emotional exhaustion can cause high turnover rates, which in turn leaves companies in a constant state of training new-hires—a drain on already-limited resources.

From a strategic standpoint, if you’re not getting payments to suppliers in a way that’s conducive to their operations, they could go out of business. They might also choose to stop working with your company altogether. To them, not all customers are ideal, and as more of them abuse the “customer is always right” notion, suppliers have to withhold the benefit of the doubt and act in self-preservation.

I’ve experienced both positive and negative aspects of the financial battle. On the one hand, I’ve negotiated with large retailers who ground businesses down to the thinnest margins. Smaller companies who rely on their enterprise customers to stay afloat are often forced to accommodate them, knowing that they are expendable and replaceable. Conversely, I’ve worked with a global manufacturer that valued its supplier relationships and would only offer early payment discounts and supply chain financing if they knew it would benefit the supplier. This company holds stress-free, decades-long relationships.

When suppliers don’t get paid on time, they may decide to deprioritize the offending customers. By becoming a nuisance in their process, your supply chain could feel the impact. Ultimately, this translates to your inability to generate revenue.

Buyers Care

Fortunately, more companies seem to value their supplier relationships than not. I recently participated in a third-party study to understand what potential payment automation buyers value the most about adopting such a solution. Supplier experience took the third spot after efficiency and fraud protection.

Supplier experience appears in our buyer persona research too. When I meet with customers, they want to ensure that we treat their suppliers well. It’s not only part of the company culture they wish to instill in all of their relationships, but they also worry about the impact on their AP team and the supply chain if something goes wrong. They understand any economic impact on their suppliers ultimately translates to higher prices.

Supplier Experience Now

Supplier experience has always been a crucial part of our value proposition as a payment automation solution, and why we continue to focus on building upon the improvements we have already implemented.

We have a dedicated team that supports suppliers on behalf of each customer. Because many customers share the same suppliers, we act as the main point of contact for all of them, which reduces the number of touchpoints a supplier must make to resolve payment issues or update contact or financial information. At the same time, we’re flexible. Some of our customers have invested deeply in their supplier relationships, and they still prefer to be involved in communications. In those cases, we don’t have to be the single point of contact. Suppliers can contact us or their customer’s AP team—whichever suits them.

For suppliers with hundreds of customers in our network—which is common in verticals such as automotive, construction, and technology—we even offer consolidated payments. For example, we combine all their incoming payments into one deposit and supply a data-rich file for easy reconciliation, right down to the customer and invoice level. This data is delivered either through our payment portal or by email.

Creating a Satisfying Experience

At Nvoicepay, we’re always looking at new methods for supporting customers and suppliers alike. It’s our goal to offer better payment products, faster payments, and more real-time data. Our most valuable report cards take supplier opinions into account, and we are proud to consistently receive satisfaction ratings above 98% from the suppliers who interact with us.

Buyers have immense power over suppliers, and sometimes they press that advantage hard. As a payment automation provider, we advocate for and support our customers—the buyers. However, we have found that supplier advocacy results in measurable success for all parties involved.

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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.

Cryptocurrency

2020 Global Challenges for Cryptocurrency

Blockchain, Bitcoin, and Cryptocurrency are some of the terms that you must have heard at some point in your life. Especially in the past decade or so, cryptocurrency became the talk of the global economic forums. As many authorities began to question the future of monetary assets, money, and similar resources, cryptocurrency was among the more controversial topics.

In 2019, right before Blockchain could have seen a public acceptance phase, the revolution came to an abrupt halt. According to the Gartner Group, it was called ‘Blockchain fatigue.’ Other experts also jumped on the bandwagon that the fire of Blockchain technology and virtual currency, in general, has fizzled out. People thought maybe it was a phase after all that overstayed its welcome.

Pragmatically, the perspective is incorrect. According to recent statistics, the crypto market has an estimated total market capitalization of over $155 billion as of 15th March 2020. Considering these numbers and based on many financial institutions, powers might tend to disapprove of cryptocurrency, but they are in favor of Blockchain technology. The disruptive nature of decentralized currencies such as Bitcoin and others has led to a corresponding halt to its progress.

Let’s find out what more challenges do cryptocurrency has to face as the year 2020 goes by.

Challenges Hindering Cryptocurrency Growth and Acceptance Worldwide

The following are the challenges hindering cryptocurrency growth and acceptance on a global scale.

1.  Boom Phase for Blockchain

There is no doubt about the fact that where cryptocurrency is facing the challenge of surviving and being accepted by the masses, Blockchain technology has already surpassed it. The masses have widely accepted it, and big names of global trade specialists are now moving towards Blockchain.

The likes of Trade Lens by IBM and Maersk’s joint Blockchain investment in the shipping industry have welcomed the first-ever initiative taken. Many such mind-blowing initiatives are underway that involve Blockchain apart from the cryptocurrency domain. The challenge for crypto-enthusiasts here is that once the Blockchain technology takes off without crypto, it will be the end to it.

2.  Bad Imagery

Cryptocurrency, even after having gone through a boom phase, still has a PR problem. The terms associated are enough to conjure up images of cringe advertisements, low-quality campaigns, bad actors, get rich quick schemes, and criminals alike. For many people, cryptocurrency spells out new technology for age-old scams and frauds, which they don’t want any.

It may seem like a petty issue, given the magnitude that is a cryptocurrency and the Blockchain industry. However, this issue has hindered crypto for years since its inception and will continue to do so if no knowledgeable individuals came forward in favor of it.

3.  Blockchain vs. Authorities and Officials

US constitution is known worldwide for its protection right given to the democratic entity that the country is. Freedom of speech, access to information, and the right to form an opinion is protected by the officials to be open. However, on the flip side, when it comes to assets and financial resources, our system laws, governments, and authorities are designed to keep it limited amongst the powerful.

It is evident why crypto and Blockchain has taken over a decade to adjust in an economy where it had to tackle issue arising from the core of how our economy and society operates.

a. Lack Of Legislation

Digital currencies are decentralized virtual entities. They are purely digital products, and our authorities are not geared to handle this advanced technology. That is why the lack of legislation regulating these digital currencies and providing any sort of user protection has become a huge challenge.

The essential step that needs to be taken to reduce the risk involves educating and informing people about keeping their personal data safe. There is still a gaping void where insurance and dedicated legislation needs to be placed. But until that happens, awareness to safely exercise crypto is crucial.

b. Legal Obstacles

In addition to lack of legislation, the other big obstacle that stands in the way of cryptocurrency holders like Bitcoin traders and users is the challenge to spend their holdings. The untraceable nature of Bitcoin and its bad imagery as a mode of finance for mega criminal activities like terrorist attacks and the drug trade has made it quite scandalous in some countries.

Cryptocurrency is going through a period of abrupt halt where nothing much seems to be happening around the technology. Therefore, one can’t say for sure that what the future holds unless wide acceptability affects these legal obstacles standing in the way of crypto-trading.

4.  The Technology Is Still Immature

Cryptocurrency faces implementation obstacles beyond the lack of regulation and inactive obligations. The technology is an emerging one and is still immature in a system where other options are widely scalable and accepted over it.

One might think how a technology that has been out there for over a decade now can be new and emerging. The reason is that not much has been done to expand it.

a. Interoperability

Interoperability or the ability of computer system software to exchange and utilize information is a challenge faced by Blockchain. The technology has been divided to make multiple uses of it in different industrial domains, separate form cryptocurrency.

The technology needs to be made interoperable for the internet dedicated to Blockchain and crypto exchange. Until then, as long as people continue to go by illegal and wrong means of mining it, the technology is a threat to the economic system that opens its gates to accept virtual currencies.

b. Usability

This point cannot be emphasized enough how difficult it is to buy and sell crypto. We are way in the year 2020, and it is still as difficult as it was back in the day when Bitcoin was first launched. The mere participation in the crypto world requires a nerve-wracking validation that general people find unappealing.

The security procedures are so complex that they have become hurdles in crypto adoption as a mode of exchange. Most students look for personal statement help UK who have a high interest in cryptocurrency markets but unable to compose a compelling profile.

It is still a significant challenge for the industry to create user-friendly processes for buying, selling, storing, and using cryptocurrency securely without being called out for it.

c. Scalability

The generally acceptable country-wise currency exchange and even the banking transactions in different currencies have been made scalable and adaptable to the different rates. Cryptocurrency has years of effort to go until it finally reaches a scalability level that Dollar, Yen, Pounds, or Rupee have gotten to.

While interoperability may be a huge step forward to achieve that, that itself is a challenge to mitigate first, the system is so slow, and many dominant platforms for smart contractual applications are still under development. The processes face numerous delays and would require many scalable solutions to counter this issue of exchange.

d. Data Rights

Data has reached a level of becoming a digital asset at this point. Digital mafia considers data the real deal and a key to all things penetrable for the immense value it can hold for individuals and organizations. That is why one of the biggest lose loop in cryptocurrency is and will always be data rights and privacy.

The solution here is not just government protection of privacy and data for cryptocurrency traders. A dedicated system is required where such identities can capture and control their own data. And where there is a long way to go for an efficient framework, many initiatives have been taken and underway.

e. Security

Blockchain might be immature, but it is so far advanced that it is more secure than a traditional computer system.

However, many financial breaches, data leaks, and huge losses due to the system vulnerabilities have made it challenging for people to be satisfied with their transactions. At one point in time, $250 million were lost in a single transaction through QuadrigaCX exchange due to its deadly centralized business model.

In addition to it being not secure enough, these pieces of news make rounds globally. People have lost faith in cryptocurrency over time.

2.  Difficulties Of Bitcoin Transactions

In 2013, a crypto-enthusiast made a luxury car dealership in Costa Mesa, CA, for a Tesla Model S and paid for it in Bitcoin. Just under 92 bitcoins that were worth over $100,000 at that time, the deal was sealed and legally conceived. Considering this transaction and comparing it with the real-time value of crypto right now, the setback and skepticism surrounding Bitcoin have not done much harm to the growing estimation of it.

However, one cannot move past the real-time losses that have occurred given the Bitcoin transactions over the years. Spending Bitcoin is still a huge deal than hoarding it.

a. Countries Banning Bitcoin

Countries like Vietnam, Bangladesh, Bolivia, and Ecuador have prohibited crypto transactions. The state bank has outlawed it and declared cryptocurrency an illegal form of payment with a heavy fine due to violators. And even where it is legal, there are countless logistical issues.

Even in the United States, the Securities and Exchange Commission is having an ongoing debate if it prefers new regulations for the cryptocurrency market. If major countries with relevant economic forums stand against Bitcoin, it will become increasingly difficult for the crypto-type to gain acceptance from the masses as people continue to engage in it illegally.

b. Conversion Issues

Conversion remains a huge hurdle for Bitcoin vendors. As Bitcoin is not a fiat currency and is only limited to monetary value when converted to a cash equivalent, not many vendors go for its conversions for other cryptocurrency types. They are more willing to look for a payment method that delivers in Dollars or any other local currency. So that any exchange made for goods and products is made on consumer rates.

Such an implementation system is difficult even if bigger brands are willing to make it possible. No matter if a business sells cars or academic writing services, there is a lack of appropriate regulations to facilitate this type of exchange.

c. People Losing Money

Though Bitcoin regulatory protocol was not affected and not a single Bitcoin disappeared or got lost, people lost loads of money. The downfall and cases of transactional breakdowns are the major reason why cryptocurrency came to an unannounced halt in the first place.

There is a serious need to regulate and change the trading and mining protocols in Bitcoin and other cryptocurrencies. Only then can I expect the general public to safely indulge in Bitcoin mining and trading without feeling it to be illegal or a complete daredevil gambling moves on their part.

d. Volatility Of Prices

The volatility of prices also hangs in the balance of the potential of Bitcoin and cryptocurrency in general. Even though Bitcoin has gained significant community following over the years, there have been disputes among the community member for deciding the path it should take.

The compact user base has made the currency increasingly volatile. The stability expected concerning a centralized authority system to regulate it will increase once people start to accept it. The doubts about Bitcoin’s usage and the resistance by major countries to integrate the system and legalize it will continue to deteriorate the prices further.

Conclusion – The Stakes Are High

All in all, the results of no action being taken by major industrial giants, businesses, and government authorities have never been so altering ever since all these years of crypto trading and mining as it is now. The year 2020 is going to shape the cryptocurrency industry either for better or for worse.

Crypto networks like Bitcoin, corporations like Facebook, and nations like China implementing digital currency by the end of this year will be taking a step towards stumping Dollar as the record currency. It will, in turn, lead to the US Federal Reserve pushing ahead of the digital counterpart.

There is no denying that the stakes are high, and just like everything else, the future is unpredictable for cryptocurrency too.

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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.

invoice automation

3 Reasons You’re Still Manually Entering Invoices (Even with Invoice Automation)

The Accounts Payable process continues to require too much manual handling, even after decades of automation efforts. Even the best invoice automation efforts range from 70-90% data extraction accuracy, which leaves overstretched AP teams with a lot of manual data entry.

Why is this the case? There are a few limitations of invoice ingestion technology that inhibit its ability to extract information. Below are a few reasons why you still need to manually enter invoices.

Reason #1 – Invoices need to be in a structured format to be read accurately

Invoice automation can ingest 70-90% of invoices if they come in a standard layout, or are already digitized. However, according to Levvel Research, enterprises on average still receive 22% of their invoices in paper format, which can arrive folded, wrinkled, or get warped when manually scanned, making them difficult for invoice automation systems to read.

Even if the invoices are already digitized, they may not be in a consistent, structured layout that is suitable for general-purpose OCR – particularly invoices from smaller contractors such as catering services, janitorial services, or small businesses. Most AP teams will need to double-check these invoices after ingestion, or manually enter them into their system.

Reason #2 – Invoice automation uses general-purpose OCR technology

Most invoice automation uses general-purpose Optical Character Recognition (OCR) tools to read PDFs and images. These tools are designed to read text in any situation – a novel, a letter of complaint, or a newspaper article.

Just like people who are jacks of all trades but masters of none, technologies intended for general use face trade-offs compared to purpose-built tools. For example, because general-purpose OCRs aren’t trained to specifically read and understand financial documents, it often misreads a British pound symbol (£) with the number 6, or a dollar sign ($) with an S.

It also can’t factor contextual clues into its work. If an invoice is scanned upside-down, general-purpose OCR cannot understand or extract any information because it’s only familiar with a certain layout. Similarly, it would have trouble with wrinkled, creased, or unevenly lit documents. And just as a student can easily recognize an unfamiliar street address from another country, so too can context help a contextually-aware system identify the important attributes of an invoice it’s never seen before, like supplier and recipient, prices, quantities, descriptions, and so on.

OCR technologies specifically tailored and trained on finance use cases, paired with context-aware AI will offer much higher accuracy rates, making it possible to dramatically reduce the fraction of invoices that can’t be automatically read and entered.

Reason #3 – There’s still a lot of manual data entry

Although reducing manual invoice entry from 100 to 30%, 20%, or even 10% is fantastic, for an AP team with a high volume of invoices, 10-30% manual processing is still a large amount of work that drives up processing costs and time.

Depending on the form of the invoice, there can be dozens of different data points that need to be input into the accounting system. This doesn’t just cost the time and resource of the manual entry itself. It also introduces a lot of room for typos, errors, or missing information that slow downstream processing. Maybe someone mistypes an invoice number using the letter “O” instead of a “0” – but with this simple mistake, a unique invoice is created in the system, and now won’t be flagged as a duplicate. This risk is multiplied when there are several people involved in the process, increasing the processing time and delaying vendor payments – even with the most capable and efficient accounts payable teams.

This can increase the time it takes for invoices to be paid out, straining existing vendor relationships. According to a 2019 benchmarking study by IOFM, even many companies with significant invoice automation struggle with this: 53% of them paid at least 10% of their invoices late – very likely the very invoices that required manual processing.

The future of invoice automation

If the invoice process was fully automated, AP teams could drastically shorten their payment cycles and take advantage of early payment discounts for even better ROI. For a large enterprise, this would result in enormous savings. For example, imagine a company that processes $250M in invoices annually, of which 3% is eligible for a 2% early payment discount. Early payment would result in $2.2M annual savings.

Notwithstanding decades of progress and widespread adoption of automation technologies, it’s clear that invoice ingestion still has significant potential for improvement that can deliver huge business value from the automation itself and from unlocking benefits of a faster processing time.

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Josephine McCann is a Product Marketing Manager at AppZen, the leading AI-driven platform for modern finance teams. 

financial

Financial Technology Industry Poised for Growth ‘Now Now’ in Africa

MS: Let’s face it – The financial market in Nigeria is frenetic and the country’s banking regulations have a reputation for being tough to navigate; what must companies such as NowNow do in order to be successful in a system that is quickly growing, but facing new challenges every day?

Sahir Berry, Founder and CEO, NowNow: It is true that the Nigerian market is dynamic, and it exudes varying degrees of energies depending on the prevailing market forces. The regulating institutions which are saddled with the responsibility of stabilizing the market and its players are doing as much as they can. However, a lot more can be done in areas of policy formulation, implementation, monitoring and evaluation.

NowNow as a company has been able to navigate its way amidst these challenges by strictly complying with Nigeria’s laws and seeking to engage with law-abiding organizations in strategic alliances towards the common goal of providing sound financial solutions for the populous. NowNow has heavily invested in research and the close monitoring of market trends and their evolution to allow for swift adaptation to what the market is offering at any given period.

Companies such as NowNow should continue to invest heavily in research that would provide quality information aimed at making sound business decisions.

MS: The National Information Technology Development Agency (NITDA) of Nigeria has basically said that the Information and Communications Technology (ICT) sector must be developed domestically from local manufacturing, through the use of Nigerian-made software, hardware and telecommunication products. Has this autonomously-led regulation helped or hindered your ability to keep up with market demand and industry growth, both inside and outside of Nigeria?

Sahir Berry: No. This regulation has not impeded NowNow’s ability to keep up with market demand and industry growth. Rather, what the regulations have done is to avail more of a level playing ground for institutions like NowNow to seek out talents in our various locations and coagulate them to build a super product that will serve consumers, irrespective of their locations.

As NowNow’s tech team is based in Nigeria and India – a good number of our products are developed locally, with an indigenous advantage and local acceptability. This brings about a sense of inclusion to all parties involved in the production process.

MS: How do you make sure that your agents have enough cash to dispense to physical Naira to NowNow users and how do you regulate and monitor their dealings?

Sahir Berry: Our processes are very strategically handpicked, standardized and monitored after thorough KYC compliance. There is a reasonable daily limit to all transactions made by either the agents or consumers. Agents are allowed to hold a daily imprest up to the limited daily amount for the day’s transaction. In some cases, the agents are conversant with the transaction trends in their area and they are able to project a new limit not exceeding the company’s limit for themselves. This is put in place to control the movement of funds from one party to another, and also to forestall money laundering and other financial vices.

MS: How has mobile banking changed the fortunes of not only Nigerians, but Africans across the continent?

Sahir Berry: Mobile banking has assumed a lead position in the banking space. The ease with which people transfer funds from one end of the country to the other can not be overemphasized. This has helped to create a new micro-economy and an ecosystem that has afforded many of the unbanked the access to cross the financial and market inclusion divide.

According to a report undertaken by our team of researchers in-country, it was discovered that financial inclusion in the area of payments and pension rose significantly in less than a decade. An appreciable growth was recorded, with digital payments moving from 22% in 2010 to about 40% in 2018, while pension rose sparingly, from about 4.9% in 2010 to 8% in 2018.

Despite the fact that the financial inclusion goal of 70% by the year 2020 via digital payment has yet to be achieved, tremendous improvement has been made, with over $90 billion worth of transactions executed in over 9 million deals across all fintech platforms by the end of 2018 in Nigeria.

The Nigerian electronic market grew by 19.30% and was worth $174 billion in 2018 alone and as of 2019, we have about 25% growth, worth some $225 billion. These developments have created more jobs via tech startups and also aided financial inclusion in all of its tenets (e.g. equal opportunity and community empowerment). Talented Nigerians are employed by these startups to help create more solutions that will benefit a target of reducing financial exclusion to 20% by the end of 2020.

MS: What do you believe sets NowNow apart from the competition? How is your mobile banking app different from the others that are featuring in Nigeria?

Sahir Berry: NowNow has risen above the stratosphere of mediocrity in the fintech space. We have strived very hard to distinguish ourselves from the rest, by providing the value proposition of being service-focused and customer-centric, and also proving a flexible solution to a myriad of financial challenges, subject to varying levels of market-testing and simulations, our goal well before embarking on production.

We painstakingly evaluate our end-users and potential end-users alike and work with what works for them. At NowNow, the focus is strictly centered on value creation.

Our model is tailored to the agent-consumer-merchant ‘tripod’, such that we have a model that suits all businesses. Our mobile app is a ‘super-app’ model that helps with airtime recharge, utility payment, insurance, health, entertainment, sports and many more.

We chose the brand name NowNow because we live the reality of the name. Everything can be done on our app, our ecosystem, at the snap of one’s fingers.

MS: Considering the ICT sector is entirely domestic, how does NowNow manage data protection for its clients?

Sahir Berry: NowNow has software components that are deployed on an AWS Cloud Platform, which ensures that inherent security is added to our payment platform.

We follow strict data policy procedures in order to keep our consumer information safe from unauthorized access, by making sure our IT systems are given access based on ‘Roles and Permissions’. NowNow as a licensed mobile money operator by the Apex bank in Nigeria. We went through a thorough audit from both internal and external auditors (CBN and the Bill & Melinda Gates Foundation). Adhering to industry best practices is a source of pride for us. We do not intend to relent on our efforts to lead, as even more stringent measures are being put in place to forestall data leak from any source.

MS: How will NowNow help its customers during the COVID-19 (coronavirus) crisis?

Sahir Berry: These are turbulent times for all. We have chosen to intensify our efforts in aiding smooth and seamless transactions, even in the face of varying degrees of economic ‘shut-down’ across the globe.

We have ensured that our staff works remotely to provide technical assistance around the clock for all of our agents and consumers. We are aware times like these mean many lean heavily on mobile money transfers and ‘cash-out’ transactions, as people are observing social distancing and trying to reduce physical contact in all facets.

We are abreast of the prevailing circumstances and we have evolved in various ways to meet these challenges. Also, we have lent our voice in the campaign on staying safe and staying indoors to help curb the spread of COVID-19.

MS: How will NowNow remain resilient through a period in which the coronavirus has sent global markets into chaos?

Sahir Berry: We know tough times never last, but tough businesses do.

We are resolute with our vision and we are going to keep devising ways to adjust to the pandemic’s ramifications towards recovery. Presently, we have adopted the remote working style, and we keep track of this and all other events on our platform electronically. This will be intensified, and more security measures will be put in place to guide against possible system compromise.

payment

How to Make Important Adjustments to Your Payment Strategy

The first couple of weeks of sheltering in place regulations saw finance and accounts payable organizations scrambling to set up remote operations and get payments out the door. Most were able to accomplish these goals quite well. Now we’ve moved into the next step–establishing efficient workflows and productive practices. It’s still challenging, however. Companies have to find ways to keep people safe while executing paper-based processes that keep their teams office-bound. For example, many companies still have to go into the office to pick up mail, circulate invoices for approval, and prepare checks for mailing.

They also must consider the best way to move forward and develop strategies for managing their teams through economic uncertainty. The Conference Board, a non-partisan economic think tank, recently sketched out three possible scenarios. Their best-case scenario predicts a 3.6% decline in US GDP for 2020, while the worst case would see a 7.4% decline. In other words, nobody knows what the next six to 12 months are going to look like.

That means AP needs to focus on conserving cash while keeping operations moving. They can expect more calls from suppliers since Accounts Receivable teams typically ramp up their efforts in tough times. They need to prioritize payments and capture early pay discounts. Procurement is going to reach out to try and renegotiate prices or terms. Treasury is going to be very interested in the timing of payments and managing working capital. It’s on the AP team’s shoulders to make sure they’re engaging with these teams and coordinating efforts.

At the same time, they’ve got to consider the efficiency and the productivity of their own team as we continue to work remotely. Among other things, that means coming up with a strategy for shifting to electronic payments at scale.

Many organizations have had this goal for a long time, but, depending on the research you look at, around 40 percent of business payments still issue by check. This number is down from a decade ago, but still problematic in a remote work environment. So why don’t businesses pay more of their suppliers electronically? Well, as everyone who rushed to shift suppliers to ACH payments when shelter at home orders took effect has learned, you can’t just flip a switch and move all your suppliers.

It’s easy enough to find a bank to handle ACH transactions for you. It also sounds a lot cheaper upfront than checks—if you only look at transaction processing costs, which are usually well below $1.

But with ACH, you have to enable your suppliers one by one, and then store and update their data securely. That becomes a fixed cost because there’s a constant churn of suppliers and their bank data–changes usually around once every four years per supplier. You should also expect to manage exceptions that arise with ACH file submissions and more nuanced supplier questions.

Thinking ACH is cheap or straightforward is one of the biggest misconceptions holding companies back from paying electronically. That’s not to say you shouldn’t make ACH payments. That said, they should be part of a holistic strategy that addresses the entire payments workflow, encompassing all forms of payment, including international wire payments.

What does that look like?

Card first

If you’re going to reach out to suppliers to enable them for electronic payments, you should first ask them to accept payment by credit card.

Virtual cards–sometimes known as single-use ghost accounts or SUGAs–are not as well-known as they should be in finance and accounting circles. Still, they can be an incredibly valuable part of your payment strategy. Unlike P-cards or company-issued credit cards, virtual cards exist to pay suppliers easily. Each card has a unique number that can only be used by the assigned recipient in the designated amount. That provides AP with substantial control and makes it one of the most secure, fraud-proof payment methods. You also should expect to receive rebates to offset some of your AP costs.

The main challenges are enablement and outreach, which don’t require significant effort on the part of AP teams since virtual card payment and remittance are relatively straightforward for suppliers. All that’s left is to structure your rebate program to support your team’s efforts and then some.

ACH for most

If a supplier declines to accept card, which often happens due to the interchange fee, your second request should be to enable them for ACH. Most vendors will say yes to this; in fact, they’d prefer it to check. Just be sure you have a realistic appreciation of the true ACH payment operating costs, including enablement and data management, as well as fraud support.

Check for holdouts

While the number is dwindling, there are some suppliers with a ride-or-die mentality who won’t accept anything but checks. For these suppliers, an outsourced payment provider can do a print check from an electronic file, so your team doesn’t have to handle all the paper.

Your payment strategy should include automating the payment workflow. Fintech ePayment providers wrap these disparate workflows into one interface so that all AP has to do is click “pay.” Then their payments will issue to their suppliers in the method they elected to receive. Because these platforms are in the cloud, payments can be approved and scheduled remotely, with visibility for multiple team members.

Heightened fraud protection

Your payment strategy should also include fraud protection. The pandemic, the move to remote work, and challenging economic conditions have created a perfect storm for a rise in all types of crime, including payment fraud. It’s essential to have strong internal controls, especially now that sensitive information is residing in your teams’ homes and on their personal networks. Preventing theft is a key component of cash management.

It used to be that organizations mainly worried about check fraud, and that’s still a problem, but it’s reduced quite a bit thanks to controls such as Positive Pay, Positive Payee, and watermarks on checks. So far, there aren’t similar controls for ACH. As businesses have gravitated towards ACH solutions, such payments have become more of a target for fraudsters. That’s a problem because the funds move faster, making it much harder to recover a fraudulent ACH.

Business Email Compromise (BEC) schemes are the most common type of attack. These involve fraudsters masquerading as suppliers, company executives, or other high-ranking personnel, requesting that funds route to a new, fraudulent bank account. We’re already seeing that the pandemic has provided BEC scammers with new material to convince an overwhelmed AP to comply with these requests.

To protect your team, you need a partner who can support your enablement and fraud protection goals, so your team can stay focused on cash management.

Finance and AP have long intended to go electronic, but the transition has been slow. It’s not just the flip of a switch or the sudden addition of a new payment type. Very few businesses realize how strategic the shift is until after they’ve committed to an update. Many companies that don’t plan accordingly have had to revert to check payments when they realized the actual cost and effort it takes to switch suppliers over. Rather than trying to attack a single pain point, you have to address the whole process from top to bottom.

Now we are going to see an acceleration of this shift with the remote workforce and challenging economic conditions. There is a new imperative, and there is also new technology. Interestingly enough, a lot of the fintechs providing B2B payments technology got their start during the great recession, when the financial system collapsed, and cloud technology was being born. These are now mature companies, ready to “cross the chasm” and transition their partners to 100 percent electronic payments.

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Derek Halpern is the SVP of Sales for Nvoicepay. He has over 20 years of technology sales and leadership experience, including 16 years in the fintech and payments space. Derek’s previous positions include VP of Sales at Billtrust, an AR automation technology company, and Sales Director at TranZero, a payments company. Previously, Derek co-founded a company called ProService Software, which was sold to Solomon Software. Derek became the Western Region Sales Manager for Solomon following the acquisition. Derek earned a BS in Business Management from Pepperdine University.

Josh Cyphers is the Vice President of Product & Strategy for Nvoicepay. 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 was a Senior Manager and Consultant at Microsoft, Vice President of Finance at Visa, and Business Planning and Analysis Manager at Nike. Josh is a lapsed CPA, and has a BS in Economics from Eastern Oregon University.

banks

OUT WITH THE OLD: WHY BANKS MUST ADOPT FINANCE TECHNOLOGY TO REMAIN RELEVANT

The term “FinTech” continues to saturate the news and financial institution reporting in recent years. It’s not surprising that streamlining financial services in the age of automation is something traditional banks struggle with adopting as global markets capitalize on technology. The trade sector on a high level is already purging antiquated, traditional processes involving paper, phone calls, Excel spreadsheets and tedious, unreliable methods of tracking and invoicing.

Now that FinTech is part of the bigger financial picture, it only makes sense that more companies in the global trade market are adopting FinTech as the norm rather than an option. This presents its own set of challenges for banks to overcome as much as it presents opportunities in optimization and risk mitigation. FinTech has its own challenges to overcome as well before it can successfully replace the traditional financial processes currently in place.

To understand exactly how FinTech fits into the bigger picture, we must break it down and evaluate all angles. To start, trends in emerging finance technology include variables from governments and dominating players to emerging acquisitions positioning big tech as a disruptor and solution to trade finance. So, what are some of the top emerging trends currently found in the financial technology space? According to experts at Azlo, a no-fee digital banking platform, government regulation will weed out fly-by-night FinTech while ownership of a self-sovereign identity will become more prevalent for risk modeling. Additionally, FAANG companies are currently positioned to become major players in the FinTech space as they continue to raise the bar for consumers and businesses alike.

Azlo also maintains that banks must adopt FinTech and emerging tech to remain a relevant part of the financial industry, warning that if they don’t, European, African and Asian markets, which possess less regulation and oversight, will own the space very soon. Additionally, optics, trust and inevitable obsolescence will ultimately serve as supporting reasons behind the adoption of emerging tech in the banking space in the near future.

From a safety and risk mitigation point of view, cybersecurity requires a sophisticated and advanced system to combat various strategies hackers utilize to disrupt the financial industry. Cybersecurity goes hand-in-hand with the recent surge in FinTech and will present itself as a challenge for financial companies to mitigate. How will this risk impact banks from a cost perspective? Think of it in terms of compliance and regulation. Circling back to Azlo’s expert point that once the government starts implementing harsher regulations, the days of FinTech will take a different stance in the financial industry. An example of this is found in Mexico’s FinTech law that took full effect this year and in the Latin America markets. As noted in a November Nasdaq article: “The goal of the FinTech law was to help bring more people into the formal economy. Additionally, it would help to reduce the amount of cash in circulation, which would cut down on money laundering and corruption as well.”

Nasdaq experts also point out the significant progress FinTech has made within the Mexico and Latin America markets. “In January 2019, Albo raised $7.4 million, sparking a surge in investor interest in Mexican neobanks,” states the article. “In March 2019, Mexican neobank, Fondeadora, announced a $1.5 million round of investment, and in May 2019, Nubank, Brazil’s largest neobank with over 15 million users, announced its plans to expand into Mexico.”

Considering the reputation for cash dependency in Mexico paired with the more than 273 FinTech ventures operating in the country, it’s no surprise that FinTech is disrupting and recreating opportunities for global markets while changing the way cash flow is approached.

FinTech will not necessarily hurt the traditional banking model, as it does offer an automated and sustainable approach for customers while keeping up with what is expected of companies on a cultural scale. To remain relevant, banks should consider what customer generations are emerging while maintaining the changing ecosystem supporting efficiency, sustainability and cost-savings.

Furthermore, FinTech is changing the way investments and lending are assessed. FinTech allows for much larger sets of data, providing a new level of visibility. Possessing the ability to manage multiple information streams that reflect the health of a company is found as an unmatched solution provided by FinTech, according to Azlo. With this information, companies can further evaluate next-step approaches and what actions in place need to be revisited, revamped or completely eliminated. The name of the game is data visibility, folks, and that is exactly what FinTech is doing to redefine how finances are approached.

“FinTechs are relying on different information when underwriting consumers, looking at things traditional banks have never considered and providing more people with access to personal and business capital,” explains Donna Fuscaldo in her blog, “The Rise of Fintech: What You Need to Know & Financial Services Now Offered.”

“Traditional financial institutions may be late to the FinTech party, but they haven’t missed it altogether,” Fuscaldo writes. “Many of them are creating their own services or partnering with established FinTechs to bring services to their clients. It’s happening in every aspect of FinTech from robo advisors with Charles Schwab’s Schwab Intelligent Portfolios to digital payments with Visa’s Visa Pay digital payment service. Even heavy hitters like JPMorgan are turning to FinTech’s data to evaluate applications for loans, and Quicken Loans, the online mortgage lender, launched its Rocket Mortgage app that can churn out mortgage approvals and rejections in minutes. All of this action on the part of the traditional financial services industry make for more choices beyond just the startups.”

With cybersecurity and automation consistently creating new ways for companies to optimize their payments while maximizing data and integration, only time will tell how much regulation global governments will impose and whether that reshapes the FinTech marketplace. One thing is certain: Traditional banking will continue to be challenged to redefine how customers are served, transactions are protected and how the investment and lending sectors approach opportunities throughout the international and domestic markets.

AR

How to Create an Enduring Workflow for AR

Please note: Vocabulary in the payment automation world varies. While customers (i.e., clients, buyers) and their suppliers (i.e., vendors, beneficiaries, sellers) are both considered customers to payment automation companies like Nvoicepay, this article will use the terms “customer” and “supplier” to distinguish between them.

Imagine having to switch out old railroad tracks while a rusted steam engine thunders across. Adopting modern electronic payments runs about as smoothly for banks.

When you think about how old banks are in the U.S., it’s an understandable plight. They’ve been running on the same tracks since the first bank’s founding. Additional features, like wire payments and credit cards, were added over time as a complement to the old system. But the rise of nimbler financial technology (fintech) companies has lit a fire under them. Now they face the challenge of converting their processes to electronic means without disturbing their clients’ day-to-day business.

In a way, fintechs have it easy. Their very nature makes competing against banks a breeze, primarily because banks were built to last, and fintechs were built to adapt. They can easily shift gears to meet demand and immediate needs. Meanwhile, banks are frequently caught up in bureaucratic processes that make it virtually impossible to react quickly to problems.

Financial and fintech industries feel the contrast most often when tackling payment security—specifically when it comes to cards. Even though check payments incur 25% more fraud instances than card payments, according to the 2019 AFP Payment Fraud and Control Survey, many companies hesitate to make the switch to more electronic means.

Kim Lockett—the Director of Supplier Services at Nvoicepay, a FLEETCOR company—offers a glimpse into why companies are hesitating to shift gears: “Fraud is not a new issue to companies,” she states. “But what we’ve learned is that fear of change overrides the fear of potential fraud loss, even among companies who have already incurred those losses.”

With almost 30 years of experience in payments and financial services, Lockett possesses a holistic perspective on supplier expectations for seamlessly receiving payments, with payment fraud protection listed as one of the highest priorities. She’s heard all the horror stories, from a small business whose checks were stolen out of their mailbox and cashed, to a company whose employee tried to use business deposit information to clear her personal checks.

That’s not to say that errors and fraud don’t occur for card payments as well. But they occur significantly less and are much easier and faster to resolve than check, ACH, and wire payment issues.

What’s the Holdup?

In the last decade, fintech companies have improved the tracks on which many accounts receivable (AR) teams function. From providing lower processing costs for card payments to offering user-friendly portals for reliable payment retrieval, fintechs transform painful AR workflows into a functional process.

Meanwhile, banks have just begun to offer pseudo-solutions that appear to be tech-friendly but still run on old tracks. An excellent example of this is lockbox technology, where banks mitigate the processing of check payments and their data for their larger customers by taking on the work themselves. This sort of offering likely extended the life of check payments. Still, it didn’t eradicate the underlying problem: that even though work has been lifted directly from their customer’s shoulders, someone at the bank still has to process checks and submit data for manual reconciliation. The process is hardly automated, and the advent of payment processing technology has all but made the entire process impractical.

Embracing the Future

Of course, the best way to avoid check issues is to avoid checks. These days, electronic payment methods offer higher levels of security. But if electronic options like virtual card numbers are such a fantastic option, why are so many companies avoiding them?

Lockett states: “In general, I think companies are afraid of handling credit card numbers because they feel there is risk involved.”

It’s not the dangers of check payments, but misconceptions about electronic payments that cause companies to refrain from accepting them. Many AR teams rationalize that they’d rather respond to the inevitable check fraud cases they understand than walk unprepared into the relatively unknown territory of card fraud.

When checks are stolen and cashed, there’s very little that can be done. At the end of the day, someone will be out that money. Other electronic payment types like ACH and wire are significantly safer, but can still experience fraud, especially internal instances, such as when a company’s employee submits their personal bank account information to receive company payments. Whether these issues are reversible is dependent on each unique scenario.

Card payments, particularly the virtual card numbers provided by fintech companies, are typically protected by two-factor authentication. Whether this means that AR is supplied with a login to access secure details or a portion of a card number, the information is much more difficult for bad actors to access, securing the payment process and reducing the risk of fraud.

In the end, not every company will have the capacity to accept card payments, so leaving alternate options open like check and ACH truly boils down to how much individual payment providers value customer service.

Taking Suppliers Along for the Automation Journey

In many cases, banks have rushed to cater to customer’s needs, leaving suppliers in the dust when it comes to follow-through on electronic payments. Despite these efforts to change, most larger banks still follow their old tracks, and their customers and suppliers experience the same lack of customer service they always did.

With over 10 years of support development behind them, fintechs have expanded their offerings to suppliers, catering to their specific needs, whether they require something as simple as customizable file formats or a more significant request like payment aggregation. Fintechs that follow through with supplier support are truly delivering on their promise of offering an end-to-end solution. They are building tracks that support the advanced bullet trains that companies have become.

“Ten years ago, companies were reluctant to add virtual card payments to their list of accepted payment types,” says Lockett. “Education, experience, and word-of-mouth have established virtual card payments as a mainstream and relevant way to conduct business.”

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Alyssa Callahan is the Content Strategist at Nvoicepay, a FLEETCOR company. She has five years of experience in the B2B payment industry, specializing in cross-border B2B payment processes.

FinTech

FinTech: 5 Automation Trends That Are Impacting the Industry Right Now

The FinTech industry is rapidly moving toward automation as a source of efficiency. The move to specific tools and software programs increases speed and accuracy of processes. It also keeps employers on their toes as they need to quickly evolve and learn. Many of these programs previously required specialized training and adaptability.
Automation helps with repetitive procedures and simplifies complicated tasks. It increases accuracy and safety measures, while minimizing human error. Expectations indicate that the FinTech industry will extend its tech integration significantly over the next four years.


Here are 5 automation trends that are impacting the Fintech industry right now:

1. Human Resources Management: This used to be one of the least automated components, but now software like Workday and 15Five are building platforms to assist workflow with related systems that support employee management. Finance companies increasingly recognize that their people are the most valuable resource and need to be managed more thoughtfully as well as efficiently.

2. Mobile: Finance companies now consider mobile oriented tech as part of the core work-flow. The industry relies heavily on its ability to get work done efficiently. FinTech continues to utilize software which speeds up communication and productivity. Mobile used to be considered a security risk by the financial industry. Now it is considered a way to enhance productivity as well as provide more flexible workflow for employees.

3. Customer Support: More automation is taking over customer service. This support has advanced tremendously with certain software programs that include internal systems to support customers. Software systems such as Fresh Desk and Zen Desk are cutting down on the head count needed for customer service departments in some companies. But more importantly these new systems are improving the customer experience and the lives of the people working in those departments.

4. Billing/Invoicing: Payments systems like Stripe, invoicing and billing systems like Freshbooks, and more advanced ERP systems Netsuite are examples of programs that continue to reinvent the way FinTech is automating business functions. Although many companies are still at least partially stuck in the past of creating manual invoices and payments, these automated systems are increasingly taking over. Both the customer and the vendor win with greater automation in this area. Vendors cut costs and get paid faster. Customers benefit from this greater efficiency of vendors with lower prices or higher value delivered for their purchases.

5. Accounting: Xendoo, Zoho, Quicken online and other systems automate are automating the accounting, bookkeeping, and tax filing functions of businesses. Traditional accounting software, and human bookkeepers and accountants, still have an important role to play in this area, but the accounting business is rapidly changing as well due to technology. The number of people involved with these activities is likely to shrink dramatically as automation takes over more of these functions. Ultimately businesses and their customers will benefit from this via lower operating costs that allow for better value to be delivered rather than spent on administrative functions like accounting.

It is crucial for companies of all sizes to be knowledgeable about this trend and keep their business updated as automation continues to reinvent Fintech industry jobs. You have to be able to adapt quickly to these changes. Our previous ideas and habits of doing business are changing, and we have to keep up with those changes or be left behind by competitors who will adapt more quickly

Automation is impacting Fintech employees in a variety of complex ways so it’s critical for employees to have a greater understanding of and training on different software systems to ensure they keep up with the automation and benefit from it rather than viewing it as a potential threat to their jobs. There is no way to stop technology. All of us need to work hard to stay on the right side of its inevitable progress.