To secure sufficient liquidity via company-wide cash and liquidity management is a key strategic aim of any company. In the current economy, this can even safeguard a company’s survival. With workforce mobility gradually pervading almost every aspect of business, opportunities for organisations to increase levels of productivity and efficiency are higher than ever before. These benefits could be multiplied several-fold, however, if the business was to introduce mobile payments.
Although examples of mobile corporate payments are few and far between, they are a realistic proposition for businesses today. Innovative mobile payment services create a business environment where redundancy is removed from payment processes, status information is readily available because transactions are tracked in real time, and payments become easier to reconcile with orders and deliveries. This unique real-time payment and workflow management capability that the mobile medium provides enables the corporate treasury to dramatically increase efficiency, as only previously experienced by the switch to electronic invoicing (e-invoicing) and BACS payments.
Mobile finance management solutions have the potential to free purse-holders from their desks, too. They can then spend more time with key customers and suppliers, while still having their finger on the pulse of the organisation’s cash flow. Moreover, the cost and risk of handling cash is significantly reduced.
By mobile-enabling their teams and empowering financial decision-makers to make informed judgements and authorise payments on-the-go, treasurers are able to save the business money and improve their organisation’s cash position. In fact, with access to the right mobile controls, finance departments could expect to reduce their company’s operational costs by as much as 20%.
The more business applications are mobile-enabled, the faster decisions can be taken – all because users are empowered with up-to-date information. Mobile-enabled users are often able to upload new data on-the-go, too. This allows, for example, sales and deliveries to be registered in real time, while ensuring that any issues are addressed as they present themselves. As a result, workflow is much slicker because follow-on actions no longer depend on front-line personnel returning to the office to update systems.
Even greater benefits are possible if finance managers’ mobiles are connected into corporate systems. No need for costly new automated enterprise resource planning (ERP) systems, as a mobile overlay enhances a wide range of functions, particularly when centralised systems are being dynamically updated with live feedback from along the supply chain. This gives finance managers a clear line of sight of the company’s financial position at any given time via their own mobile devices, empowering them to authorise transactions and initiate payments even when they’re out on the road.
The potential impact across the business is significant. For example, supply chain agents can ensure they have payment funds ready in advance of a goods delivery, following mobile notification that they are en route. If on-the-spot changes occur to goods received, an adjusted electronic payment (e-payment) can be made using the company’s secure mobile payment facility – and the books balanced in real time.
In another example, the ability to authorise payments promptly via a mobile device enables line managers to approve travel requests without delay. Staff can now take advantage of early-booking deals, saving the company money.
Inefficiencies arising from finance processes that rely on manual spreadsheets for the consolidation of data are not only debilitating for the business because of the delays, scope for errors and additional costs incurred. They also impact an organisation’s ability to track the availability of working capital. Corporate treasurers are well aware of the increased pressures on a business not only to function more efficiently, but to maintain optimum levels of liquidity. The better the balance between too tight and too high levels of idle cash, the greater a company’s options to efficiently deploy cash.
In addition, cash flow forecasting increasingly influences the availability of external financing for corporates. When applying for finance to release working capital, organisations – irrespective of their size – must reassure banks of their creditworthiness. One of the main ways a business can do this and improve its risk profile is to show improved business efficiencies across the supply chain and efficient cash flow forecasting.
Supply Chain Challenges
Many organisations remain bound by laborious, sequential processes and limited supply chain visibility. The more fragmented the supply chain agent network, the more acute the problem has become; smaller independent agents in particular offer little in the way of real-time insight into goods handling. Mobile-enabling sales, purchasing, distribution and logistics functions can help address this situation, because of the unique real-time capabilities that characterise the mobile medium.
Additionally there is a tendency to respond quicker to messages coming in on mobile devices compared with email and traditional phone channels. Statistics indicate that 96% of mobile text messages are immediately read, which is why the channel has become so popular for appointment reminders and delivery confirmations.
Once a company is able to extend the flow of mobile data from functional teams right back to the finance department, it will find itself able to benefit from a wide range of efficiency benefits, from improved control over stock holding, returns and dispute resolution to reduced cash handling and improved liquidity. Being able to make payments spontaneously and confidently in line with cash flow plans and supported by an up-to-date view of the business enhances financial planning. This in turn reduces an organisation’s dependency on bank financing – a valuable proposition given the continuing economic uncertainty.
When they do need to extend their bank borrowing, companies are better able to meet their banks’ risk mitigation criteria by proving their ability to freeze the distribution process in the event of dispute, tally stock values, adherence to a clear return policy and invoke penalties to keep suppliers in line.
All of this gives organisations stronger leverage with the banks, increasing their chance of approval and of securing better terms. What’s more, their reliance on these lines of credit is reduced because the company now has a better handle on its actual needs, reducing their exposure to borrowing charges and interest payments.
Pressing Banks for Mobile Payment Services
For the banks themselves, a company’s improved business insight paves the way for accelerated decision-making, while lowering default risks. Both parties benefit from the increased liquidity, which banks leverage to create further revenue opportunities and corporates to negotiate higher interest rates.
However, deploying mobile finance management solutions should not be a concern for the corporate treasury alone, but rather something the banks should be offering to them. While the banking sector is not known for its speed to introduce new technology, there is greater urgency for them to embrace mobile payment facilities because of the threat posed by faster-moving contenders whose pending solutions could bypass the banks altogether.
Given that inter-bank lending is at an all-time low, banks now rely increasingly on the corporate sector for sources of funding too, further adding to the leverage corporates can exert when demanding new services.
Any bank or corporate organisation seeking to make rapid headway with mobile payments will need access to proven and secure processing capabilities and cost-effective speed to market. For maximum flexibility, companies will benefit most from harnessing a mobile payment platform that is delivered as a managed service through their bank. Such a universal platform is available, capable of supporting all banking systems, mobile networks and mobile devices, as well as any currency and any language.
In a highly volatile market, companies should take advantage of the situation to press for solutions that offer real value to them as they try to maintain control over their cash position. Taking advantage of mobile payment facilities already available today can be a very good place to start.
Europe’s opening banking regulation is finally here. After months of preparation across the continent, the Revised Payment Services Directive comes into effect on January 13.
The revised Payment Services Directive regulation, regarded as one of the most disruptive in Europe’s financial services sector, will begin to make an impact on January 13, 2018.
The cost of compliance efforts for banks has increased exponentially in recent years. This is especially true for those banks that are active in the global trade finance domain, where the overwhelming expectation is for compliance requirements to become even more complex, strict and challenging over time.
This year promises to further the regulatory compliance burden imposed on financial institutions. How are firms in the sector responding to the challenge?