Technology

How tech companies see their payment operations

payments

Competition and market demand create opportunities for technology companies, but they also exacerbate back-office payment frictions.

While the tech sector has fared much better than others due to the pivotal role it has played in enabling consumers and businesses to adapt to the pandemic, high demand and competition create their own challenges.

Meeting demand requires robust, well-functioning back-office capabilities, and PYMNTS research found that many technology leaders believe their payments operations aren’t necessarily up to the task.

In fact, 75% of tech companies rate their payment operations as “somewhat efficient” at best, according to the Smart Receivables Playbook, a collaboration between PYMNTS and Flywire.

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The largest share of tech companies – 68% – rate their payment operations as just “somewhat efficient”. A further 7% consider them “not at all” or “slightly” effective. Only 25% of tech companies rate these operations as “very” or “extremely” efficient.

The top five pain points of tech companies

Some universal challenges specifically affect the efficiency of accounts receivable (AR) across industries, such as late payments and complications in processing different forms of payment.

In fact, most companies report monthly revenue losses caused by time spent managing outdated AR infrastructure and processes.

Read more: Flywire: 2021 was the year of digital first

The intensity of the various universal pain points, however, depends very much on the nature of the industry and market conditions. Financial fraud, managing relationships with multiple vendors, and accepting international payments are the top issues cited by organizations overall, but they are particularly likely to cause problems for technology companies.

The top five AR issues facing tech companies are financial fraud (cited by 19% of tech companies), managing relationships with multiple vendors (12%), accepting international payments (9%), obtaining real-time access to sales and transaction data (9%) and handling customer payment queries (8%). These are the issues cited by technology companies as the most pressing challenges impacting their AR operations.

Financial fraud is a growing concern for businesses across all sectors of the economy, as malicious actors have sought to exploit the growing share of economic activity taking place online. Not only corporate funds are at risk, but also those of their business partners. These risks must also be factored into how a business calibrates its cybersecurity challenges, as ineffective fraud detection can create “false positives” and inappropriately block legitimate payments.

The challenges facing AR departments are amplified when companies do business in foreign markets, and with that often comes the territory of tech companies.

A step change in AR processes

The idea that existing AR processes are obsolete and outdated is not new. The US government has estimated that paper billing costs the economy hundreds of billions of dollars every year.

A myriad of technological innovations have emerged to mitigate these inefficiencies, such as optical character recognition (OCR) and electronic signature capabilities.

However, the development of cloud systems and robust global connectivity represents a step change, enabling not only the use of a few plug-in tools, but also the move to digital platforms that provide end-to-end visibility and control. butt on AR.

The challenge for AR leaders, including those in technology, is how to use these platforms to meet their specific needs while minimizing the need for additional staff and expertise to implement and operate them. .

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NEW PYMNTS DATA: ACCOUNT OPENING AND LOAN SERVICE IN THE DIGITAL ENVIRONMENT

On: Forty-two percent of US consumers are more likely to open accounts with financial institutions that facilitate automatic sharing of their bank details upon sign-up. The PYMNTS study Account opening and loan management in the digital environmentsurveyed 2,300 consumers to explore how FIs can leverage open banking to engage customers and create a better account opening experience.