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Automation – the key to ensuring your organisation survives tough times and thrives

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By Paul Sparkes, Commercial Director

 

Business is going to get tougher

Your cashflow is under increasing pressure. The very lifeblood of your organisation is under threat. And you’re perpetually in the crosshairs because so much of this is on your shoulders.

Sound familiar? If not, it soon will – because that’s what happens in a ‘downturn’. You know this all too well because you’ve experienced it before, and it isn’t pretty. Tough times are coming.

It’ll be the fast, agile businesses that’ll feel the least pain: the ones with adaptable accounting teams that can move swiftly, identify new efficiencies and seize opportunities. Just like the mammals that superseded the dinosaurs.

In times like these, you don’t have the time to struggle with outdated on-premise/entry-level software that lacks functionality and needs constant workarounds.

Why would you?

Now is the time to act. Now is the time to make sure you have dependable, controllable finance software that:

  • ensures you get paid faster – preserving cashflow
  • speeds up debt chasing – so you’re more likely to recover monies owed
  • streamlines verification and payment of expenses – keeping staff onside in a recruitment crisis
  • keeps customers sweet – when retention has never been more important.

 

It’s time to take control and embrace automation

‘Automation’ can be a scary word for the uninitiated – especially where payments are involved. The idea of a faceless bot handling money does not always sit comfortably. Not when you’re a cautious soul with responsibility for the financial health of a business.

But big banks thrive on automated systems. Those systems inevitably involve your company and they run smoothly enough. And many of your customers and suppliers are also using accounting software automation – and it too processes payments without issues.

Automation is delegation – not abdication. With the right true cloud accounting software, you are always in control. Always. You can do test runs to ensure everything is correct before approving and activating an automated payment run. (‘Trust but verify’ as the intelligence community used to say.)

This testability is very reassuring. It wins over those worried about clicking the wrong button. Even the staunchest defenders of manual payment systems can become automation evangelists when they can check in advance to ensure everything will work perfectly.

And remember, you’re delegating payment runs to a machine. An automated system will do precisely what you tell it to do. Over and over again (until you tell it to do something different). This removes the risk of mistakes caused by humans forced to perform mundane and repetitive processing tasks.

 

Get paid faster – chase debts more efficiently and more effectively

Everyone knows that the longer a debt drags on, the less likely you are to get paid. So you need to deal with debts promptly. Before they mount up.

As you might imagine, automated debt chasing is much faster and far less labour-intensive than traditional methods. Phone calls and manually generated emails all take time – vital hours that could be better spent on customer retention and new business acquisition.

Automation is also elegant because you can set it to send out different dunning emails based on customer type – so you won’t annoy your VIP clients.

Your royalty customers get the red carpet dunning email…while the shameless bad payers get a more direct missive. Meanwhile, new customers get another type of email gently reminding them of your payment terms…and so on.

Sadly, not every accounting software platform offers all this straight out of the box. It is unusual at the entry-level end of the market but there are a few providers out there!

Some mid-market systems offer debt chasing automation but generally only as an add-on. That means longer implementation times and greater integration costs. Not ideal for finance leaders that want to move swiftly and cut overheads.


Cut the cost of dealing with expenses

Sometimes it can take months to settle expenses. Manual processing of expenses can be fraught with delays that waste time (and therefore money), annoy customers and alienate staff. The situation is so bad that 38% of employees no longer bother to claim back expenses.

Automated tools are helping to move companies and accounting departments away from the stress of end-of-month expense claiming towards a much more manageable day-to-day operation.

This improves the lives of staff. Not just those wanting swift reimbursement rather than waiting for their next payday – but also for those performing the checking and processing.

There is less admin, a more manageable workload and there are fewer errors due to haste. All that time previously wasted on the expenses verification merry-go-round can now be diverted to more important work that actually results in real business growth.


What are you waiting for?

It’s a well used adage, but failing to prepare is preparing to fail. Many of us can see the writing on the wall – despite what the leadership candidates promise as part of their plans for the economy.

A cost of living crisis spurred on by rising interest rates and spiralling inflation are obvious signs of a pending recession. If your finance department is not equipped with the right software to help you manage cashflow, chase debts and keep your customers and employees happy during tough times, then you’re in for a rough ride.

In an industry which is renowned for being risk averse, why risk the financial stability of your organisation on outdated finance software?

 

Business

How can businesses boost employee experience for finance professionals?

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By Martin Schirmer, President, Enterprise Service Management, IFS

Over the course of the last year, The Great Resignation has seriously impacted organisations across the globe. Staff are quitting in huge numbers, leaving companies unprepared and struggling to fulfil their workloads. In fact, mass departures are happening at all levels of the labour market, as employees attempt to adapt to the hybrid working model and growing socio-economic uncertainty.

In light of this, optimising the employee experience (EX) to attract and retain talent has become a top priority for employers. Organisations have come to understand the necessity of taking immediate steps to drive employee engagement and reshape workplace culture.

The financial services (FS) industry is no exception to this trend. From increasing employee burnout to growing career dissatisfaction, the pandemic has exacerbated the need for transformation across finance teams. This is exemplified by recent data from Spendesk, which found that approximately 40% of finance professionals are willing to leave their roles or already have concrete plans to do so.

Organisations looking to get ahead of the competition must put in extra efforts to retain their existing workforce. The fact is that employee expectations and requirements have irreversibly changed, with more workforces becoming increasingly distributed. Today’s hyper-connected workforce values flexibility and simplicity, and it is organisations which offer these experiences that will succeed in the long term.

As part of this process, finance companies must look towards the power of technology to create seamless user experiences across devices. From automating workflows to improving overall efficiencies, Enterprise Service Management (ESM) can help organisations to boost user satisfaction and go that extra mile for their employees.

How poor EXs are driving finance teams to quit

With over 40% of employees spending a significant proportion of their time carrying out mundane, manual tasks, it is not surprising that poor EXs are having a detrimental impact on job satisfaction. Finance teams in particular have been slower to digitise core processes, leading to a heavy reliance on manual tasks. This not only increases the amount of time spent on each task, but also impacts the engagement levels of finance professionals who cannot focus on more strategic aspects of their roles.

As a result of the pandemic, flexibility has also moved to the forefront of finance teams’ desires. Given the fast-paced nature of this industry, the conversation surrounding work-life balance has increased rapidly. Failure to offer flexible working policies, coupled with a lack of technology to facilitate this flexibility, has led to poor EXs across the board.

Most notably, the overarching move to omnichannel, digital-first approaches has dramatically reset both customer and employee needs. Finance is the third-slowest running corporate function behind legal and IT. Operating in a competitive environment, 73% of finance operations are facing pressures to speed up, improve efficiency, and prioritise automation.

Mitigating the problem using technology

ESM, an offshoot of IT Service management (ITSM), is the cornerstone of smart digital transformation for organisations. It can help finance teams to streamline and automate routine processes, such as monitoring the status of service requests, approving expenses, sending invoices, and tracking payments. In turn, this will free up employees’ time, reducing the burden of manual tasks and enabling them to focus on the more strategic tasks.

Another advantage ESM can offer finance teams is the ability to adapt to each department’s minimum requirements for data privacy. Accounting, for example, needs additional layers of compliance built into the system.

ESM can also facilitate cross-departmental collaboration, helping finance professionals to communicate with the wider business and perform tasks more effectively.  Organisations can use ESM to incorporate all internal services into a single platform, offering employees a well-rounded view of the business and promoting a sense of community across all levels of an organisation. This will boost productivity, whilst enhancing visibility and control.

Ultimately, the current job landscape has brought with it a new set of challenges. Organisations in the FS industry looking to navigate the storm and retain top talent must refocus their efforts on bolstering the EX. Embracing a new era of technological innovation that empowers employees and boosts engagement is a critical step in this process.

 

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Business

CBDCs: the key to transform cross-border payments

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Dr. Ruth Wandhöfer, Board Director at RTGS.global

 

If you work in finance, you’ll have been hearing a lot about central bank digital currencies (CBDCs) and the moves different markets are making towards using, regulating and evaluating the viability of moving to an economy based on digital currency.

We are already seeing progress in the research, piloting and introduction of CBDCs into the financial system. The Banque de France for example, recently launched its second phase of CBDC experiments in line with the “triple digital revolution” unfolding in the financial sector. The infrastructures of financial markets and fintechs, however, are not prepared to accommodate their security, stability, and viability.

This could be an issue in the not too distant future. Each year, global corporates move nearly $23.5 trillion between countries, equivalent to about 25% of global GDP. This requires them to use wholesale cross-border payment processes, which remain suboptimal from a cost, speed, and transparency perspective. In fact, the G20 cross-border payments programme considers improving access to domestic payment systems that settle in central bank money, as one of the key components in facilitating increased speed and reducing the costs of cross-border payments.

The current state of cross-border payments

International transactions based on fiat are currently slow, expensive, and highly risky due to today’s disconnected financial infrastructure, messaging, and liquidity. Wholesale cross-border payment settlement can take 48 hours or longer, which is not practical in today’s digital world. Even if not every market moves to CBDCs, in an increasingly digital era, cross-border settlements between central banks will unavoidably involve dealing with CBDCs. So, not only will we have different currencies, we’ll have different technical forms of currency being exchanged – digital and fiat – as markets adopt CBDCs at different rates, adding another layer of complexity to cross-border settlements.

While there is much anticipation about the opportunities CBDCs can bring, the adoption of this technology will only be widespread if payment and settlement capabilities are overhauled to allow for new innovations in currencies.  This need for transformation represents an opportunity to redesign existing infrastructure to support cross-border CBDC transactions.

The current cross-border payments system involves correspondent banks in different jurisdictions using commercial bank money. Uncommitted credit lines used in cross-border transactions are a potential risk for any bank that relies on credit provided by a foreign correspondent bank. Interestingly, there is no single global payment and settlement system, only a complicated network of interbank relationships operating on mutual trust. While trust has allowed financial systems to function smoothly, when it begins to fail, as it did during the 2008 financial crisis, the result can be catastrophic.

Following the crisis, the Bank for International Settlements (BIS) implemented the Basel III agreement, which required banks to maintain additional capital against correspondent banking account exposures. These risk-weighted assets impose a costly capital charge on positions held by banks at other banks under correspondent arrangements. While this framework helps combat risk, it neglects to address the inherent problems in traditional correspondent banking that contribute to these risks.

Making the case for CBDCs

CBDCs can offer an improvement in settlement risks and are certainly thought to have potential benefits by the BIS. If implemented correctly, wholesale CBDCs can indeed accelerate interbank transactions while eliminating settlement risk. They can also encourage a more efficient and straightforward method of executing cross-border payments by reducing the number of intermediaries.

It is likely the evolution towards CBDCs will initially see the financial market supplement rather than replace existing payment instruments with new types of digital currency. CBDCs will coexist with current forms of money in a wholesale context, and their payment rails will also work alongside the existing payment systems. In simple terms, CBDCs will need to be linked to the broader capital markets ecosystem and applications such as securities settlement, funding, and liquidity.

If built with an innovation-first mindset, the future of banking infrastructure should provide full interoperability and convertibility between fiat, CBDCs, and any other type of digital money used in wholesale payments.

The future of CBDCs

To unlock the full potential of CBDCs, a ‘corridor network’ will need to be formed. This involves combining multiple wholesale CDBCs into a single, interoperable network under common governance agreed upon by all central banks involved. The legal framework of this platform would then allow for payment versus payment (PvP) or, where applicable, delivery versus payment settlement.

Practical wholesale CBDCs appear to be on the horizon, either as a supplement to existing financial systems or as part of a transition to a digital, cashless world. Looking ahead, central banks would benefit from collaborating with fintechs that provide innovative cloud native technology to enable seamless wholesale cross-border payments without interfering with the flow of funds. If wholesale CBDCs are to become a reality, fintechs must be prepared to accommodate them.

 

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