By Kyle McNabb, SVP of product marketing
Ineffective accounts payable (A/P) processes are costing UK—and global—businesses considerably. According to the US’ Institute of Finance & Management (IOFM) each payment costs an organisation twice as much to process in an organisation with less effective A/P functions than it does in best-in-class companies.
With a dogged focus on cutting wasteful spend in many organisations, A/P should not be overlooked. Automation is one way leading organisations are finding points of savings in A/P, as doing so can significantly improve effectiveness and efficiency, reduce human errors and missed payments and ultimately boosts satisfaction ratings thanks to faster payment processing.
When done right, automation is also embraced by A/P staff, as it allows them to cut down the time spent on manual processing and instead gives them more bandwidth to focus on managing exceptions, developing relationships with suppliers and taking on new tasks.
Deploying the right software solution is a first step in a successful A/P automation project, but that effort must also take into account best practices in order to realise the greatest results.
Centralisation and organisation are key to any effective accounting process. But in many organisations, the data leveraged by A/P comes from disparate sources. The company’s enterprise resource planning (ERP) system usually serves as the main source, but there are countless others. Consider, for example, the systems that reside with sales staff, external vendors, customers or other points along the supply chain, such as transportation carriers and manufacturing and warehouse facilities.
If the information needed to streamline the management of exceptions is not centralised—with data from different source systems connected via unique identifiers such as vendor ID, account code and customer name—then it cannot be leveraged seamlessly to automate payment processing.
Furthermore, a lot of content is available only as paper, PDF, image, etc. That content must be scanned to have critical data elements—such as the date, account number or amount—electronically captured and metadata created. Then, and only then, the content can be indexed and stored in a repository and database. From there, the invoice and associated supporting content can be linked and processed via workflow.
Some automated A/P solutions can integrate myriad information and content formats with their data repository. It’s important to confirm the solution you select can, in fact, cover formats such as Microsoft Word and Excel, PDF, email, video, scanned capture documents—and uses a variety of standardised methods to exchange information in electronic formats (e.g., XML, JSON and EDI). They should also intelligently index, archive and organise this content so that users can easily find and access necessary information. An effective automated A/P platform also includes auditing and reconciliation capabilities, which alert users to errors such as duplicate, short or delayed payments.
Centralisation entails storing all critical accounting documents related to A/P in a single place. However, in even the most streamlined enterprises, these documents still touch several different systems. Some documents are stored in an ERP system or a content-collaboration platform, but other crucial information often resides on paper, in sales contracts, on inspection certificates or elsewhere. Disparate systems that function independently and without effective integration only prolong accounting processes.
To be most effective, the payables software solution must be able to communicate with all core systems that house relevant documents. If it can’t, records can become “lost in the loop” and put the organisation at risk. To prevent this, any A/P automation solution should integrate with the company’s content services platform (CSP) and ERP systems. Integrating systems and federating content across them leads to substantially reduced processing times.
A/P-related systems aren’t the only software in the company that contains information relevant to A/P processes. Marketing, customer service, operations, manufacturing and legal, among other major departments, have some bottom-line impact on business operations.
Because A/P staff spend most of their time dealing with transactions that are not PO-based or with PO exceptions like mistakes in amount, quantity, price, payment terms, etc., having this information is critical to their effectiveness. And although this information exists in other departments, it is rarely made readily available to A/P to use when resolving exceptions.
Automated A/P solutions can centralise enterprise content beyond the documentation that is typically considered central to payables processes. When evaluating solutions, assess if the system uses standards-based REST APIs, low-code web-hook enabled content-centric workflows and content federation to access content stored in repositories used in other parts of the organisation. This approach will improve transparency and yield improved cost savings within A/P and the broader supply chain.
Reaping the Rewards
When a company is able to tighten its A/P processes, the entire business reaps the rewards. It eliminates the processing delays that result in inaccurate reporting, poor financial visibility, delayed business decisions, costly reruns and wasted money. It also allows money to flow into and out of an organisation faster. According to IOFM, organisations that apply A/P automation best practices can pay their non-PO invoices on time 96% of the time, compared to only 13% of those that are less automated.
The key to enabling that is to capture, manage, federate and audit content across the entire organisation and ensure systems work in concert across different departments and applications. Only with that centralisation, integration and unification can a company make more-informed business decisions and improve cash flow for the near and long term.
THE FUTURE OF CUSTOMER EXPERIENCE IN DIGITAL BANKING
By Richard Billington, Chief Technology Officer, Netcall
Over the past five years, the digital banking revolution has had a seismic impact on the relationship between customers and the institutions that handle their money. Since digital banking established itself as the new norm for consumers, there is now a growing expectation for enhanced levels of convenience and security. Recent proof of the evolution has come from Lloyds Banking Group, which recently announced the closure of 56 branches, as an increasing number of customers ditched branch-based banking in favour of online platforms.
Banks are trying to adapt to rapidly changing behaviours by integrating their services seamlessly into their customers’ daily lives. However, whilst offering new opportunities for banks to reach and respond to customer needs, the digital realm also presents an increasingly competitive playing field, with challenger banks constantly entering the market. We are continually hearing of new banking brands offering cash incentives to encourage customers to switch banks. This tug of war is putting increased pressure on banks to outdo one another, in order to retain customers and foster long-term loyalty.
Short-term cash incentives, however, will be spent in vain if a company’s long-term digital experience is not up to scratch. Lost customers mean lost revenue, a negative impact on brand reputation, and market share attrition. In order to gain and maintain a competitive edge, banks must understand what consumers expect online, and then meet those expectations.
Getting ready to compete with the Amazon Effect
Whilst it is clear that ‘digital’ is the direction in which the industry is heading, traditional bank brands have a long way to go to satisfy consumers who want to manage their money on their phones and tablets. Today, the so-called ‘Amazon Effect’ is impacting more and more areas of our lives, and digital banking is no exception. Modern customers require instant gratification. They want to see where their package is at any stage of their delivery and, in the same vein, become frustrated if they can’t see how things are progressing with their finances in real-time.
Customers want to stay up to date with changes on their bank accounts. They want to apply for an ISA, mortgage or credit card without hassle. They want to be able to understand where they are in the process. And, most importantly, they want an experience that is unique, personalised, and available at a time convenient to them. Today the onus is on banks to deliver these experiences – ensuring interactions and processes are quick, convenient and streamlined. Those who don’t live up to these expectations risk failure in a highly competitive marketplace.
Failing to connect the dots
Despite the changing customer needs and demands when banking online, all too often customers are faced with a series of disjointed communications, leaving them dissatisfied, confused and frustrated. To solve this, many banks invest in customer-facing departments – marketing, sales and service – but the reality is their customer experience doesn’t just depend on the people dealing with customers every day. It is heavily influenced by processes and technology, the people behind the scenes – the IT team.
For many banks, there’s a huge gap between customer facing departments and IT – what we refer to as the ‘customer experience disconnect’. This means that when someone in the contact centre flags a broken process that only technology can fix, their request often gets ignored. That’s not because IT doesn’t care; it’s because they have a thousand and one other things to do. Realistically, they can’t drop everything to solve one small problem.
But when it comes to customer experience, small problems add up. If a customer can’t apply for a mortgage because an app is broken, that’s annoying. When they can’t get through to customer services because the lines are busy, that’s infuriating. And when they don’t receive a response via email, that’s… well, that may very well be the end of the relationship.
Enhancing customer engagement online
Digital transformation in financial services goes beyond just providing an online or mobile account-opening solution. Banks should build a process that connects with the customer before an account is even opened and continues throughout the entire online journey. This includes enabling tailored communication at optimal times on preferred device(s). Every customer touch point should collect insights that the bank can leverage for future communications, to foster brand loyalty and make it harder for businesses to be undermined by competitors.
Done well, digital engagement should not just represent a great communications process, but also reflect changes in the back office that simplify all stages of engagement. Most importantly, these stages should connect seamlessly across communication channels, eliminating the need to visit a branch and enabling consumers to switch between channels, such as telephone, email, social media and in-branch banking, when desired.
As the UK continues to move further towards a cashless society, which is now expected by 2030, getting digital banking right is only going to become more important in order for banks to remain competitive. And to ease the transition to digital banking while maintaining customer loyalty in the digital realm, banks must overcome customer experience disconnects and enhance digital engagement.
Creating an effective digital banking experience
At the moment, departments within banks are operating in silos. This needs to stop if businesses want to create a successful digital banking experience. In order to build trust, long-term relationships and help solve any digital experience problems, it’s important that banks start by bringing customer-facing and IT teams together.
Low-code software solutions can prove invaluable in this instance, helping to accelerate digital customer experiences whilst also enhancing efficiencies within the business. Due to their simplistic nature, these offerings can be integrated across departments and be used by non-experts and developers alike. Well-established banks with bigger IT teams can also benefit, as low-code software solutions work alongside existing systems, significantly helping to improve customer experience quickly and without the need to replace existing infrastructure at a high cost.
In our rapidly expanding digital world, businesses face more pressure than ever to pivot in response to market changes and customer expectations. Therefore, having access to tools that are easy to use whilst enabling innovation will be key to building a better digital customer experience. In addition, analytics tools can also help track performance and offer insights for process improvements and adaptations. Implementing these tools will help empower businesses to remain competitive in today’s rapidly changing banking industry.
BRAVE NEW WORLD: A FUTURISTIC VISION OF PAYMENTS
James Booth, VP, Head of Partnerships in EMEA for PPRO
Over the last ten years, the retail e-commerce ecosystem has undergone a wide-ranging transformation. As recently as 2010, the e-commerce and payments value chain were relatively straightforward: Any eCommerce merchant could integrate a payment processor’s front-end HPP into their checkout or perform a deeper API integration for a customised checkout experience. The customer then enters their card details or other bank details, which were passed on to payment platforms and schemes for processing.
In 2020, we are now well into the era of open banking, and things look very different. The volume of payments has exploded. By 2018, global digital payments were worth US$3,417.39 billion, and are expected to increase to US$7,640 billion by 2024. Using integrated real-time payments systems — which incorporate everything from authentication through settlement to confirmation — consumers send and spend money in the blink of an eye. And the speed and volume of transactions are made possible by the increased use of technology and artificial intelligence to do everything from risk assessment to anti-fraud measures.
But this very visible — and much written about — transformation is not the only way in which the payments and e-commerce landscape has been changing beyond recognition. Because while e-commerce over the last ten years has gone increasingly global, the way people pay online is more than ever local. In some markets, low rates of financial inclusion make cash-voucher schemes the best option. In others, bank-transfer apps are the most popular.
Our research has shown that between 2017 and 2019, the number of UK online transactions paid for using a bank transfer increased by 36%. Driving the use of bank transfer payment methods by UK consumers to now account for 8% of all British online transactions, with cards and e-wallets, including PayPal, leading the race. In fact, card payments account for 56% of transactions, followed by e-wallets (25%), bank transfers (8% ) and lastly cash (7%).
Some markets prefer e-wallets or primarily use locally issued credit cards. In the Nordics, deferred payment methods are becoming the norm. And in countries such as Germany, most online shoppers prefer via direct debit.
The result is a global online and digital payments market that is now incredibly diverse. And even more complicated. Even markets right next door to each other may have very different payment preferences. In Latvia, for instance, 49% of online transactions are paid for using a credit card . In neighbouring Lithuania, it’s just 24%.
Globally, by 2021, only 15% of all transactions will be paid for using the brands of credit cards familiar to most Western merchants. That number is only set to decrease. Today, local payment methods account for 77% of e-commerce spend; by 2024, it is forecast that this share will increase to 82%. There are an estimated 450+ significant local payment methods worldwide, so considering the UK mostly rely on PayPal and card payments, there is a big world of alternative payment methods the British public are yet to realise. To truly go global, merchants don’t just need break down language barriers, but also payment barriers.
Already, Klarna, one of Europe’s most popular bank-transfer and pay later app, processes €53.4 billion in online payments every year. Merchants operating in or entering Europe which doesn’t support Klarna are effectively saying that they’re not interested in any part of that €53.4 billion. And this situation is not unique; it applies to markets throughout the world.
Local payment methods, as they drive financial inclusion, will only proliferate.
When we look forward to the state of e-commerce in 2030, a personalised shopping experience is not a nice-to-have. It is an absolute requirement. Consumer preferences must be noted; if they aren’t, retailers will miss out on sales. Almost half (47%) of UK consumers will end a transaction if their preferred payment method is not available, according to PPRO research, so customising payment options for cross-border shoppers is vital. This is highly important to attract international customer bases beyond a retailer’s local remit. It’s no longer adequate to offer customers one single way of paying – in-store or online. Payments aren’t a one size fits all approach.
The best brands do this already. Those who don’t will struggle to make it to 2030.
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