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HOW TO OVERCOME THE CASH FLOW ISSUES PLAGUING TOO MANY BUSINESSES

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Ian Duffy, CEO of Accelerated Payments

 

Cash is the lifeblood of any business, but cash flow issues haunt even the best-run companies. According to JP Morgan Chase Institute research, the average business has only 27 cash buffer days in its operational runway. If cash stopped flowing in, then within a month, most companies would not be able to cover rent or make payroll.

Smaller businesses have typically battled to collect prompt invoices from larger companies, as larger companies often use their market power to force concessions. This has only been made worse by the pandemic, with the number of unpaid bills almost doubling throughout the UK at the height of the COVID-19 pandemic.

When larger businesses do not promptly pay invoices, it is not usually for lack of funds. Instead, it stems from inefficient payment structures and the failure to accurately track or analyse data from suppliers. Many accounts payable departments still run on paper, with paper invoices being costly in terms of storage and riskier than digital records.

Invoices filed inaccurately can take a long time to track down. Invoices with incomplete information can automatically get blocked, which means that accounts payable departments cannot keep their original payment schedules. Most commonly, there can be slow approval processes, which lengthen payment turnaround times.

Electronic invoicing, also known as e-invoicing, addresses these issues. E-invoicing is the exchange of the invoice document between supplier and buyer in an integrated automated format. Digitising systems allow automation, converting manual flows into instant and computerised tasks and increasing payment processing speeds of every workflow.

The global market for e-invoicing is set to grow to £516 billion by 2024, largely due to widespread government adoption and technological innovation. As governments in many countries look for a way to tackle tax loss, they have started enforcing regulatory paths to encourage adopting the e-invoice practice. EU member states have brought in mandatory e-invoice legislation for public procurement.

Tech start-ups are also introducing new, practical solutions and making e-invoicing a cost-effective billing tool. Web applications allow a more robust user interface, enabling online submissions of invoices in multiple formats, increasing the adoption of e-invoicing across businesses of varying sizes and geographies.

While e-invoicing helps businesses better control their cash flow, it ultimately does not solve the root of many companies’ problems around late paid invoices. Sending automated reminders is one thing – but actually getting the liquidity into the bank to keep things moving is a game changer that can keep a company from going under.

According to the UK banking platform Tide, the pain inflicted to businesses by late payments is chronic and widespread: on average, one in six small business invoices are paid late. This varies between industries: small businesses operating in the IT and telecoms sector see payments arriving 12 days late on average, while small businesses in media (such as marketing, advertising, PR and sales) see payments arriving over 30 days on average.

However, if businesses have never-ending late invoice problems, e-invoicing will not ultimately be the only solution required. E-invoicing can manage the issuing and reminding of invoices but cannot guarantee prompt payment, as there are only so many late reminders that can be sent.

Instead, companies are being forced to be more innovative about how they collect payments. Some businesses have started offering discounts to encourage on-time payment.  Other methods include changing how a company pursues unpaid invoices and the payment channels it will accept. Email and digital channels tend to be more effective than phone calls as employees continue to work from home. Subscription models can also lead to more reliable payment.

Another innovative approach to tackling the issue is single invoice financing. Single invoice financing helps small businesses get advances on cash they are due from specific individual invoices. Single invoice financing companies tend to work flexibly with an SME, choosing how many and which invoices they use. This provides easy access to funds without incurring fees on every invoice or financing an ongoing credit line.

Accelerated Payments Limited (AP) for example provides such a service in several European and North American markets. AP’s technology platform can streamline the settlement of invoices between suppliers and buyers as well as offering suppliers the option of funding some or all of these invoices. This gives suppliers the option to dynamically match working capital needs with a line of funding from invoice financing. AP is also planning to launch a service during 2022 that will allow third party e-invoice providers to use AP’s invoice financing module to provide their clients with invoice financing services.

The model works particularly effectively for smaller businesses that might be providing services for industry giants or larger companies with complicated organisational structures and approval processes. Companies that take advantage of the freedom and flexibility of invoice financing do not just use the funds to survive but can also thrive and scale, as they can simultaneously access credit or traditional forms of investment for further growth.

As more companies are paying attention to how they address the cash flow issues arising from late payments, they are also examining the broader context and addressing how to fund future goals around hiring, technological investment, and expansion. This is where invoice financing can go beyond a short-term solution and be a critical factor in long-term growth.

 

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IS SCARCITY OF TALENT THREATENING THE UK’S FINTECH CROWN?

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To be attributed to Rafa Plantier, Head of UK and Ireland at Tink

 

From the Square Mile to Canary Wharf, London has been the historic centre of global finance, with long-established trading exchanges and trusted financial institutions. In the digital era, it has also ensured that it’s moved with the times to become a thriving hub for fintech.

But the UK financial services sector is now at an inflection point. In the past year, London’s position as a global fintech leader has been under threat. Earlier this year, Amsterdam overtook The City as the largest European share trading hub. The European Banking Authority moved from London to Paris. And Dublin, Paris and Frankfurt are all competing to win a greater share of the European financial marketplace.

The culprits of the shift are the twin challenges of the pandemic and Brexit, combined with the speed of technological transformation in financial services – disrupting the traditional flow of people, capital and ideas. So the pressing question for the industry is: how do we maintain and, more importantly, accelerate momentum to retain London’s fintech crown?

The answer revolves around one key thing — people.

 

Diverse talent drives innovation

Attracting the best talent is crucial if the UK financial services sector is going to continue to thrive and retain its global position as the preeminent financial centre.

In February 2021, the Kalifa Review laid out a strategy and delivery model for the UK to lead the fintech revolution, covering five key areas. These included skills and talent, investment and international attractiveness and competitiveness. But what became clear was that access to the right level of highly skilled talent was one of the biggest challenges for UK fintech, with barriers spanning both domestic skills shortages and the need to access foreign talent seamlessly.

As a native Brazilian in the UK, working for a Swedish-owned fintech, I understand these challenges as well as anyone. I love London, but we must recognise that fintech firms need unique talent and skills, and such a talent base can’t be met by a single city – not even one as resourceful as London. Not only do fintechs require technology and data specialists, but also experienced managers with good knowledge of high-growth companies and financial services.

As someone lucky enough to have worked with startup and scale-up fintechs across the world,  I understand the unique grounding that comes from being a part of a high-growth global company. That’s why I believe it’s vital that we attract people from across the world with commercial experience at ambitious, rapid-growth businesses — so they can bring this experience to bear on the UK financial services sector.

At the same time, many companies face renewed pressure to create new services and products to meet expectations for growth. That is why it’s critical that the UK has access to people with the right technical skills in areas such as software engineering, DevOps, Cybersecurity and data science.

Put simply, having the smartest minds delivering the best products is good for everyone. It drives efficiency, productivity,  growth and, ultimately, prosperity.

 

The UK is open for fintech

The UK should be proud of being a fintech pioneer and the driving force behind legislation that helped usher in the era of open banking. There is now an exciting opportunity to take this even further. Having access to a diverse pool of talent and skills will empower the financial services industry to create innovative products to tackle complex social challenges, such as better B2B payments, financial inclusion and climate change.

The good news is that the UK government clearly recognises the role the industry has to play in driving growth and innovation. The 2021 Autumn Budget reaffirmed commitments to reskill the nation. With £3.8bn budgeted for skills and a formal criteria for the long-awaited Scale Up Visa, the Chancellor announced a set of proposals that will support the breadth of our sector — from startups right through to unicorns and incumbent banks. This will be essential for fintechs like ours to continue to trailblaze and for the UK to differentiate itself on the global stage.

In an increasingly competitive global landscape, and to sustain momentum, we must keep talent avenues open to attract the best of the best in the industry. As one of the fastest-growing areas of the UK economy, the benefits of nurturing UK fintech to drive productivity, growth and lead the UK’s post-pandemic recovery, cannot be overstated. 2021 has seen a surge of activity in the industry and I am eager to see what London’s fintech sector can achieve in 2022.

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SET YOUR BUSINESS UP FOR SALES SUCCESS IN A POST-PANDEMIC WORLD

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SET YOUR BUSINESS UP FOR SALES SUCCESS IN A POST-PANDEMIC WORLD

Dean Fiveash, Head of FinTech Sales, IFX

Without doubt the Coronavirus pandemic impacted every aspect of our lives and fundamentally changed the way in which we all conduct business.

From the widespread adoption of working from home, to the amplified focus on employee wellbeing and work life balance, to simply acknowledging that people are more than their job titles and are often juggling childcare, pets and terrible wifi issues all whilst trying to do their job. The last 18 months have altered the way we work forever and in order to set our businesses up for success we have also needed to rethink how we operate.

Dean Fiveash

In a people facing sector like sales,  it’s  clear that the loss of face-to-face interaction is perhaps the biggest loss and an impending challenge as we slowly emerge from the confines of the pandemic. Gone are the days of instant downloads from ‘water cooler’ conversations with the team discussing deals or general matters. Instead, our inboxes and diaries are full of zoom catch ups. This isn’t to say that success has dwindled. Flexibility of working from home has helped many businesses to grow rapidly. In fact at IFX we have enjoyed our ten best months of company sales, but there is no denying the way in which we work within our teams has shifted. So how can you set up your sales teams to maximise its chances of success?

 

Adapting To The Times

For many businesses operating during these unprecedented times the shift towards the work from home culture has seen its benefits. Speed is key in the fintech industry and video calls on top of isolated working has greatly improved our time efficiency allowing us to do more for our clients in the long run. Equally, with the workforce being spread around the country and in some cases even globally, came the need for further rigorous checks and processes to ensure the high standards set in the office environment are still being met.

Despite this I would argue that this made us better sales people, and in turn a more successful and thriving sales team.

Post-pandemic success is grounded in not just the talent of your employees but also how you choose to structure your teams. For me, the old adage ‘People Buy People’ remains the most relevant factor for developing a slick sales team. At the end of the day, the technical stuff can be learnt over time but the proficient people skills needed in client facing roles is more innate.

When evaluating team skills, individuals who demonstrate determination and the ability to keep smiling through adversity are a vital asset, especially in the fast paced fintech industry.

Having worked in numerous team leader roles within the sales industry,  I know the difference that a collegiate and supportive team can make to successfully securing deals. The key is to have people at your disposal who are going to pitch in to help others, in turn making the team more robust. In the post-pandemic world, this will remain the key quality to look for and embed as a core value across the business.

 

Fostering A Successful Culture 

Whilst the team structure and core skills are an important part of the team set up, good management and personal development structure is crucial to success. At IFX, our sales leadership team all have client portfolios and are regularly signing and navigating deals. It’s through giving my team practical experience and regular client interaction that we can gain far better market insight than through managing team activity or KPIs alone.

More discipline is also required when working at home to retain the sales focus whilst navigating domestic distractions. As such, maintaining your employee motivation and focus is something each business should work on. A difficult feat without the physical presence of your team and one balanced on knowing your employees and their individual needs. But little things go a long way, so incentives and perks such as company socials, bonuses or simply a free breakfast can work wonders to motivate others. Another tip is to set  attainable goals and regular check-ins with your team to keep motivation on track to reach peak productivity.

 

Looking Forward

Team dynamics will continue to change to adapt to the ever-changing and rapidly evolving landscape, the secret to success will remain the same.

Something to look forward to in the next couple of years as a movement,  is the greater adoption of smarter contracts and embedded FinTech, which of course as businesses and as a team we will have to adapt to.

Ultimately, my biggest piece of advice to others is to get the basics right.  A leading-edge solution fails to achieve greatness if it isn’t backed with competent sales/relationship managers and attentive operational support. Traditional ingredients for success such as reputation and trustworthiness are built over time, often through word of mouth, but building a competent team who can make your clients happy is essential to that mix

 

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