Fintech, Bank Collaboration Creates Wins for Customers
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Five “Secrets” Every CFO Should Know
Accounts payable has traditionally been an integral part of the business, providing a necessary function in the financial cycle. However, it is now being recognized as not just a cost center but also an opportunity to grow profits and scale your business.
In order to achieve business growth, it’s important for CFOs to focus on finding and funding solutions that will drive long-term growth. To help you understand how your AP department can lead your company to better cash flow management and drive more value, we’re revealing five “secrets” all CFOs should know.
“Secret” #1: Leverage Technology to your Advantage
Technology has revolutionized the accounts payable process, making it faster and more efficient. Automated invoice management systems can help you quickly identify and pay invoices, while supplier payment portals allow you to make payments online without having to go through a middleman. Streamlining these processes will not only free up to 84% of your AP staff’s time, but you’ll reduce costs by eliminating manual, paper-based payment processes.
“Secret” #2: Partner with suppliers to make payments faster and more convenient.
This will improve supplier relations while freeing up cash and reducing the time it takes for funds to be received. Suppliers are motivated to get their money faster and more conveniently, so it’s a great place to start. Suppliers want a say in how they get paid and will adopt a solution that provides a payment method that is fast and easy for them. As an added benefit, you can drive value back to your business with early payment discounts and cash-back benefits from rebates and incentives.
“Secret” #3: Forecast Cash Flow and Allocate Resources Accordingly
In order to make sound decisions about where to allocate its resources, a company needs to have an accurate view of its current and future cash flow position. Accounts payable can help the broader business by forecasting cash flow and providing insights into how different decisions will impact the company’s financial position.
“Secret” #4: Control Costs by Implementing Supplier Payment Best Practices
Best practices for supplier payments can help a business save money on administrative and processing costs. This includes negotiating better payment terms with suppliers, taking advantage of discounts for early payment, and using electronic payments whenever possible.
“Secret” #5: Focus on Cash Flow, Not Just Efficiencies
Cash flow is one of the most important drivers for business growth. Accounts payable can lead the way by expanding its responsibility and becoming better stewards of cash flow for their company. That starts with rethinking how paying suppliers can maximize revenue while cutting costs at every turn.
Hopefully these secrets have provided some insight into why your AP department should be focused on driving long-term sustainable revenue growth, not just controlling expenses more efficiently.
Want to learn more? We’ve got you covered! Check out our latest webinar on-demand to learn more about turning your AP department into a value driver for your business.
Payments Mythbusters: Thanksgiving Edition
Myth: Turkey's can't fly.
Fact: Sure they can! They’re just not great at it.
It’s the same with checks and ACH. Can these payment methods get the job done? Of course. There’s just a better way.
Not long ago, the traditional payments establishment and many merchants were downright skeptical about the ability of digitization to streamline and simplify B2B payments. While digital payments have had a transformational impact on the B2B payments landscape, misconceptions linger.
“There definitely remains a knowledge gap with those who perceive payments using ACH or checks as being less costly than digital models,” said Dean Leavitt, CEO & Founder of Boost Payments. “The misperception is that ACH and checks are free, but credit cards cost a lot,” he said.
Finexio aims to stuff that knowledge gap and shed light on truths that will improve your payment process and your bottom line with our series, Payments Mythbusters. In this Thanksgiving-themed edition, let’s set the record straight around digital and card payments vs checks and ACH (the turkeys of the B2B payments world).
Myth: Digital payments carry a high barrier to entry
Fact: Digital payments actually offer improved cash flow and efficiencies related to third-party processors you can hire like Boost and Finexio. One example of this reality, according to Leavitt, is the boom in digital B2B usage during the pandemic. “There’s been lots of businesses going into digital payments driven by the pandemic. People tend not to go back to checks and less efficient payment methods, once they’re hooked on the benefits of digital payments and specifically card products where they are getting that working capital.”
Digital payments allows companies to fill in gaps and continue moving their capital in the right direction, despite shortages of in-person time and interaction to process ACH and checks. Finexio has a dedicated onboarding and customer success team that shortens onboarding times and eliminates implementation and training headaches, allowing companies to focus on doing their business instead of shuffling paper and waiting for payments to clear.
Myth: Digital payments lack ROI
Fact: Finexio cuts costs associated with manual paper-based processes and the opportunity for cash back via early payment discounts and virtual card interchange. By streamlining the payment process with digital payment methods, companies can guarantee not only savings but returns through usage rewards. In addition, the security offered by digital payments will actually create the potential for transaction volume to increase. “Someone is willing to pay that fee instead of just getting a piece of paper sent to them”, Leavitt said, adding, “I see the fees associated with B2B transactions coming down significantly.”
This positions digital and commercial cards as the future of B2B payments, because as more transactions are happening, the price for executing the payments will actually decrease, resulting in an increasingly favorable environment for even more digital transactions.
Myth: Digital payments require expensive technology
Despite the beliefs of organizations and merchants that digital payments mean they have to acquire expensive technology, FinTech companies like Finexio and Boost build the technology capabilities in their back offices so that organizations and merchants can benefit from automation and technology without having to acquire or maintain it.
“The concept of embedded finance with software-enabled platforms that leads distribution for payments products, services and cash management tools, creates a powerful environment for B2B digital payments,” noted Finexio CEO & Founder, Ernest Rolfson. Because large financial institutions can afford to wait on ACH and checks due to their internal funds, they have no motivation to create the next generation of efficiencies.
“Fintech companies can move much quicker in terms of accommodating the needs of the marketplace,” Leavitt said. “You know, the large financial institutions, even the very best of them, the smartest of them, they just can’t move as quickly as a fintech can. And that’s a huge advantage in the marketplace.”
Myth: Digital Payments are Inefficient
This myth is particularly egregious, because, “Digital payments not only [extends] the working capital, the days payable outstanding for the buyer, but they reduce the days sales outstanding for the supplier, thereby increasing their working capital. That’s really the perfect win”, according to Leavitt. By using digital payment methods, companies can quite literally capitalize on new, frictionless efficiencies and keep themselves agile in a developing space, instead of waiting around for ACH and paper checks, and exposing themselves to fraud.
If you’ve bought into any of these myths, hopefully we’ve convinced you to toss them in the trash along with that turkey carcass.
Speaking of that bird….
Myth: Those plastic pop-up thermometers tell you when your turkey is cooked.
Fact: They let you know when the turkey is overcooked.
From all of us at Finexio, have a safe and happy Thanksgiving!
Do you have a payments-related myth you want busted? Tell us about it on Twitter — @finexiopayments #paymentsmythbusters.
Learn more about Finexio and how digitizing accounts payable can be an easy win. Contact our team for a consultation.
Embedded Software Allows for “Seamless” Payments Experience
As growth in the payments industry continues to accelerate, software integrations increasingly focus on simplifying the user payment experience. Payments providers that successfully facilitate a smooth end-to-end experience are capturing market share as customers on both sides of payments transactions prioritize efficiency and execution.
In a recent B2B Cashflow Conversations podcast episode with Finexio CEO and founder Ernest Rolfson, Dan Geraty, founder of Clearent, discussed the rapid evolution of the payments space and how organizations such as Clearent and Finexio can improve the payments experience.
“I think it’s interesting that as the industry invests in itself, there is much more emphasis on the experiential factor, the wow factor,” said Rolfson. “How does Clearent fit into the picture of simplifying payments and improving the user experience?
Geraty responded that within the B2B space, Clearent partners with software developers to enable payments as part of their value proposition, which improves the user experience while creating an additional revenue stream. “These partnerships are also good for customers, because they provide a much more seamless payment experience,” he noted.
“Back in 2017, we came across a company called Spot that specialized in dry cleaning store management software, which doesn’t seem super sexy,” he added. “The idea is that everyone pays for dry cleaning with a credit card, so that the intersection of payments and software created a stickier solution. The founders were ready to retire, so we acquired Spot, moving their customers to Clearent for payments. There were revenue synergies associated with this acquisition as well as improvements that we were able to make for the business and the customer experience.”
Clearent continued to acquire other companies in attractive verticals and earlier this year, merged with TSG to create Xplor. TSG is a global provider of business management software and integrated payments operating in the U.K., Australia and New Zealand that follows a similar strategy to Clearent.
“Together, we’ve created a global platform,” Geraty said. “We will continue to acquire software companies in verticals that we really like in addition to partnering with software companies where we can improve the payment experience.”
“How does acquiring and partnering with software companies help create more efficient and effective payment experiences?” Rolfson asked. “I would imagine that when you started, you didn’t necessarily imagine that you would be owning vertical specific software businesses.”
In reply, Geraty confessed that he definitely did not anticipate this twist. “But you could see it happen back when OpenEdge was bought by Global Payments,” he noted. (OpenEdge, a payments processing platform, was acquired by Global Payments in 2015). “They were doing a lot of integrations with software companies and growing like a weed as a result. We couldn’t help but take notice because in the merchant acquiring space, attrition is a major challenge unless you’ve got a real hook.”
“And software is the hook,” he continued. “It’s even more of a hook when you own it.”
“How is what you are doing different than the Stripe model, for example?” Rolfson asked. “It seems like it’s in the trend area of having credit card processing available to developers so they can embed it in their software.”
“Stripe is a terrific company that is making it really simple for companies to integrate payments into their software solution,” Geraty replied. “What we find is that Stripe is a bit of a one-size-fits-all solution. Software developers may start with Stripe, but as the software company matures, they seek a different solution with more support for themselves, more support for their customers and different pricing options.”
“Essentially, what you are saying is that everyone has a place in the industry or a specific focus?” Rolfson commented.
“Yes,” Geraty responded. “The global payments market is so huge there is plenty of room for everyone.”
Rolfson commented that this echoes some of the trends he sees at Finexio. “CFOs are not going to be buying outbound payment processing or outsourced check printing or having their back-office staff making payments over the phone with a credit card anymore. Instead, they are buying procurement software or AP software to run their businesses.”
This means that organizations can access payments expertise through embedded software, avoiding the complex and confusing aspects of engaging with payments separately, Rolfson continued. “It’s very elegant to get the payments in software development,” he added.
Both Geraty and Rolfson concluded that when payments are seamless and essentially disappear, organizations can focus on their core competencies. Leveraging companies such as Clearent and Finexio to this end means that payments can operate as a utility, so to speak, while organizations concentrate on delighting their customers and growing their businesses.
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