Geoff Brannon, CFO, Oversight
Many finance and accounting professionals are under immense pressure to ensure their financial processes and transactions are managed efficiently and effectively. This became especially critical during COVID as organizations focused more on reducing waste and cutting unnecessary costs.
Typical organizational spend audits look at small samples of past spend manually while also managing many other financial processes. This is time-consuming yet viewed as mission-critical by the organization’s leaders. Thankfully, with the evolution of automation tools like cloud-based software and artificial intelligence (AI) this should be a thing of the past for finance teams.
It’s hard to be effective without efficiency so we’ll start there. Your team is likely overburdened and working remotely. It’s Q4 and stakeholders expect returns. First, the team should assess where they are spending their time manually. For example, take the budget and forecast process critical for all finance organizations.
While historically Excel was the go-to tool used to manage this process, most large organizations and advanced finance teams have adopted better planning solutions. The beauty is these interface directly with the organization’s ERP system, meaning actual results flow into the planning tool in real-time. Gone are the days of exporting financial information from the ERP system and manually re-entering that into the Excel budget file. Talk about an efficiency gain!
Gaining visibility is critical to successful spend analysis. Mistakes can be made in any department including the finance team. Factors like heavy workloads, inefficient processes and the introduction of remote working, it’s understandable errors happen. To improve effectiveness in the finance department, explore the vast array of software tools that can dramatically improve processes.
Compared to manual efforts, using software automation tools results in better efficiency and accurate outcomes. Beyond saving money, one of the best outputs of these service tools is time. As finance professionals, time and money are what really matter. Leaders can empower their teams by providing competent data software that works 24/7. Manual processes should be left in the past. Cloud-based platforms ensure risk mitigation by getting ahead and identifying leaks and errors.
Become Strategic in Spend Management Efforts
Finance teams measure the performance and activity of the organization. And spend management is certainly one area that finance teams can help improve. By holding individuals and teams accountable, both in terms of mission-critical and discretionary spend, this empowers leaders in the department. Of course, in a perfect world, every employee of an organization would be a good corporate citizen and trusted to spend the company’s money responsibly. And in that same world, no external parties would attempt to de-fraud a company in order to make off with its cash. But we don’t live in a perfect world.
A 2020 study by the Association of Certified Fraud Examiners showed that the average organization loses up to 5% of its revenue to fraud each year. This staggering statistic is one that should get the attention of every finance professional. Fortunately, there are spend risk software tools that can detect and protect against spend errors, waste and fraud. Adopting this method is perhaps the easiest way that a finance team can help improve a company’s spend management efforts.
Transformation in Action
Executing a spend analysis is your organization’s barometer of truth. It sheds light on the data providing a powerhouse of information and insight. Through adopting software automation solutions, finance organizations will reduce the time spent on manual activities. Think of how you want to advance your team as the quarter closes. Transforming the finance department to be more efficient in this way yields two areas of improvement:
- First, massive efficiencies are gained by letting software do the work that was previously done by a human. This frees up team members to invest their time on more strategic areas of finance. Alternatively, these efficiencies can result in cost savings for the organization.
- Second, software automation delivers more accurate information and results, thereby improving the effectiveness of a given process. Take the example of spend risk systems I gave earlier. Instead of manually auditing a certain percentage of an organization’s spend looking for errors, waste and fraud, the spend risk solution can audit 100% of transactions and will find things that a human would miss. This results in a significant improvement in the effectiveness of the process as compared to manual, human efforts.
To increase efficiency and effectiveness in your department by empowering spend management, consider the benefits of a modern software automation tool. How does your organization perform spend analysis? I’d be happy to share how many of our clients have seen great strides implementing spend analysis software.
WHY THE EXPLOSION IN LOCAL RETAIL DEMANDS NEW PAYMENT METHODS
Kasper Enggaard Krog, CEO at mobile payment and business technology firm, Vibrant, explains why micro businesses are being badly let down by contactless payment providers while local retail has boomed.
Before the pandemic, between 40[i] and 47[ii] per cent of micro businesses didn’t accept card payments, depending which statistics you prefer. This includes everything from corner shops to cafes and builders to barbers. They relied on cash, cheque, or where suitable, perhaps the laborious process of an invoice and bank transfer.
This is despite there being 6 billion contactless cards in the world and 47 per cent of people preferring to pay with one when at a physical point of sale[iii]. At first glance, it might seem that these small traders were cutting their noses off to spite their faces. Customers wanted to pay them with cards, why wouldn’t they just allow them to do so?
What was stopping merchants?
The answer is simple. Because for the smallest of merchants, accepting a card payment has always led to expensive ongoing fees, results in slow settlements, requires admin and calls for an up-front investment in cumbersome and basic technology.
It won’t be news to anyone in the industry that the recurring costs all add up. Transaction fees are typically between 1 per cent and 3 per cent, not to mention authorisation fees and merchant service charges[iv]. A credit card reader might be about £20 and the same for a receipt printer. This all eats into profit, not to mention time.
The pandemic changed it all
Yet the pandemic has forced micro businesses to reassess their reticence to take card payments. Two reasons are behind this. Firstly, there has been an explosion in people shopping where they live. When lockdowns swept across Europe, it became hard to get to larger retailers. Local merchants of all sorts became a lifeline[v].
Not only that, but many people were forced to reconnect to their communities and realised they enjoyed shopping on their street and wanted to support independent businesses. The data proves this. According to research, the convenience store sector grew by 6 per cent in 2020[vi].
This led to the second factor, contactless payments were considered safer than handling cards or cash. The overall impact of more shoppers and the threat of infection led to a boom in contactless payments. In fact, the number of purchases made in May 2021 via contactless technology doubled compared with the same month a year earlier and was up 50 per cent on May 2019[vii].
This shift to accepting card payments among the smallest of businesses should be applauded. There are currently £2.25 trillion in cash and cheque payments made in Europe[viii]. They’re now opening themselves up to this huge market.
This is undoubtedly good for consumers and merchants alike. But it does beg the question, why did it take a pandemic to cause the change? Why did they have to face the prospect of potential infection or financial ruin to make the move?
Simple, the existing model is broken. The barriers to accepting card payments remain – high cost, poor tech and slow settlements – but they’ve been overcome through necessity rather than benefit. These businesses remain woefully underserved yet have been forced to accept what is on offer. There must be another way.
And there is. For the first time, the technology now exists for market traders, stall holders, car washes – any number of micro businesses – to take contactless payments using only their phone. No additional tech. No annoying dongles or readers that take up space and will ultimately add to the vast rubbish bin of obsolete, single-function peripheries. These will soon join calculators, MP3 players and digital cameras.
Furthermore, this tech not only takes payments, but within months is expected to allow merchants to run their whole business on their phone. They will be able to add product lists, inventory details, accounting tools and much more. It’s like a mini enterprise resource management system for the tiniest of firms. And the fees are transparent, predictable, lower than the market rate and don’t have binding contracts. Importantly, it also has the backing of Visa – and Vibrant is leading the roll-out.
The business is proud to do so and sees a huge opportunity. Micro businesses are now worth £1.85 trillion to the European economy[ix]. Their importance will grow, and they need the payments sector to take note of their needs and do better. It’s no longer acceptable to foist poor products and services upon them and allow the pandemic to drive change rather than innovation.
The explosion in local retail demands new payment methods – and they must be made available. In many ways, it’s a scandal that it took a pandemic to force change.
[ii] Visa data
[viii] Visa data
[ix] Visa data
IS SCARCITY OF TALENT THREATENING THE UK’S FINTECH CROWN?
Opinion From 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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