Payments and Cash Management
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It’s important for any organisation to not fall behind.
This episode looks at the trends in business payments for 2018/19 and how to make the most of knowing what other organisations are worrying about or investing in. Focusing on some of the most surprising results from the Bottomline Technologies Business Payments Barometer, Ed Adshead-Grant, General Manager for Payments explains what impact these will have on organisation and how to use them to give you a strategic advantage.
Rich Williams: What are your concerns in the payment industry? Think about the last ten companies you dealt with. According to research statistics, four of them don’t know if they’ve been hit by payment fraud. Even more concerning, could one of these four companies be the company you own, or work for? When it comes to payment fraud prevention, it’s important to know what your peers are concerned about, and how your business fares in comparison.
Hello, I’m Rich Williams, a host for the Payments Podcast. In this episode, we’ll look at the results from Bottomline Technologies UK business payments barometer, which evaluates the latest industry trends, and really gives insight into what financial decisionmakers are concerned about, and whether they’re managing their business payments effectively. Let’s find out if you have the same concerns.
With me today is Ed Adshead-Grant, General Manager for payments at Bottomline Technologies in Europe. Hello Ed.
Ed Adshead-Grant: Hello.
Rich Williams: So, I mentioned earlier on in the introduction, how not being in the know could impact the way in which a business manages its payments, especially given the many changes in the payment landscape at the moment. I think this leads us on quite well to what exactly the payments barometer is all about.
Ed Adshead-Grant: Well the payments barometer is an annual survey that Bottomline conducts, to around 400 or so, SMEs and corporates, and in fact this is the third one we’ve done, and it’s anonymised data, and we look to ask questions around the problems, the challenges, that corporates are facing in the payments market, and that’s really our contribution to the industry, to try and shed some light on what the day to day challenges are.
Rich Williams: So, you mentioned that this is the third annual barometer. Over the last two years, the issue of security and fraud, has very much been the main concern for financial decisionmakers, and I believe this year it’s Brexit. So, what’s the reason for this change?
Ed Adshead-Grant: Well I think the reason for Brexit coming up is of course March 29th. There’s an urgency now to have some clarity of where we’re going. We’ve got 50 years or so, to unpick with our EU relationship, and it just takes time, all of these things take time. What I would say is, with all trade, and all business commerce, there are two parties involved. So, there are interests in getting this right, as we go to Brexit, and credit cards aren’t going to stop on March 30th, nor will other payment instruments.
So, my message around it would be, yes, it’s interesting, and urgent, we need more certainty, but we’re not expecting massive change come March 29th.
Rich Williams: So, with Brexit now dominating most conversations within the UK, does this mean that last year’s concerns of security, and potential payment fraud, have been put on the backburner somewhat?
Ed Adshead-Grant: Well they may have been, but they’re still key considerations for any business to get their head around. In fact, the data this year, because it is our third annual barometer, we could see a trend line, and we’ve had 169% increase in one of the concerns, and that concern was around internal fraud. That’s a pretty big number, and one that a lot of our customers are getting their heads around.
So, I don’t think a month goes past now without some breach in security, or a fraud. In fact, even this week we’ve had MoneyGram hit with $125m hit for their fraudulent money transfer actions inside their business. We had a high street bank with 1% of online accounts breached last month, and who knows what it will be tomorrow?
So, these are big concerns, they’re very concurrent with the Brexit piece of information that came through on the survey, and one I think that will become, if I was to make a prediction, all the more important. Because, what we are seeing, is a push by the banks, onto the corporates, to make sure they have proper systems in place, they take care of their sanctions, they take care of their prevention of fraud, and just knowing where their payments are going, in a busy day.
Rich Williams: So, what are the average losses that these businesses, corporates, banks, are actually seeing?
Ed Adshead-Grant: So, this is always a difficult one to nail, because a lot of people don’t actually declare what’s happening inside the business, which is why the data is very anonymous on our barometer. Our data has pulled through a figure of £50,000 as the most common number, on a fraudulent attack. Interestingly, when you look at those that did suffer a fraudulent attack, one third of them were able to get the majority of funds back. Or, expressed differently, two thirds only got some money back, certainly less than 50%.
So, there’s a lot of pain in the number, when it does happen, it’s definitely a space where you want to prevent, rather than cure something happening, and certainly technology has a role to play there, to try and put you in a good place, to make sure these average losses of £50,000 don’t happen to your own business.
Rich Williams: The starting gun has been fired on the regulations, which are set to alter the UK and Europe’s payment landscape. Of course, I’m talking about open banking and PSD2. Now, are we ready for the world of change that they’re set to bring?
Ed Adshead-Grant: Well, ready is an interesting word. It’s interesting, for a number of reasons. This is, I think, the biggest change in a generation, to our banking, and our payments world. So, open banking, which started in the UK in January, is here, and starting to grow, and next year, more towards September, PSD2, which is the European version, will be accelerating.
What is it all about? This is about a number of things. Now the internet is fully here, we’ve got this thing called the API economy, where everyone lives through the glass, and you tap the button, and you expect real time information to pop up on the screen, well that is coming to payments through open banking.
There has been a decision that, you will own your data, whether it’s personal data, as a consumer, or a business, and you should have access to that data, under secure conditions, with the right permissions, and tokens, and encryption, but you should be able to bring all of that data to the glass, where you’re working, on the web. So, we’ll see a number of things, and I think you’ll see things like aggregation services, that’s how it will show up initially.
So, as a business you’ll see a lot more data on your screen, through some of the technology solutions under open banking. So, for example, you can see where your cash is banked, across multiple banks, on one screen. Then also, you’ll see things like comparison services, and I think we’re ready for that under open banking, where you can actually compare a number of offers, on the web, by pulling that data, again onto the single screen where you operate.
At the weekend I was talking about this with a friend actually, and they were telling me, they’re in banking, that 90% of SMEs never go outside their principal bank for a loan, they literally go with the first choice. So, I think things like comparison services will show up very quickly, and I think the market is ready to introduce that kind of competition for corporates.
Rich Williams: So, apart from open banking, or PSD2, what else are we likely to see?
Ed Adshead-Grant: Well, there’s a bunch more things happening. The one I would highlight I think, especially for UK corporates, is the new payments architecture. It’s another three-letter acronym, NPA, and this is all about UK Plc competing globally with their payments’ technology, and their payments operations.
So, what has happened is, we’ve pulled together certain bodies like BACS, and the cheque processing business, and also, faster payments, that we might know, and enjoy, in the background, all under one new governing body, and we’re refreshing the technology around it.
So, how will that show up? Well they’ll be some new services, again the technical acronyms will arrive, like request to pay, and confirmation of payee, which won’t be so important to the corporate to know, as an acronym, but they’ll enjoy being able to use it. So, something like request to pay, actually allows corporates to push out a request for their subscriber, or their customer to pay.
So, it’s almost like the reverse of a direct debit, and the customer will hit the button, say yes, you’ve requested to pay, I’m happy to pay, and that gets pushed back to you, and confirmation of payee, will just reduce some of the fraud loops that can happen in the payment industry.
So, you can be absolutely sure your payments are confirmed to be going to the right place. Probably one other thing, I’d just mention as well, under the extra pieces is, we’ll see more invoices arriving with the payment. The technology is here now, under this new NPA that is being built, that the separate payment, and a separate invoice, will be pulled together more. So, I think reconciliation in your businesses will be easier, as that starts to emerge.
Rich Williams: So, for an organisation to keep abreast of all these upcoming changes, what would your recommendation be for them to stay as up to date as they can be?
Ed Adshead-Grant: Do you know what? I would actually recommend that a company appoints a payment tsar, that might sound a bit bizarre, but have someone in your department, in your company, actually read up about payments, and be the go-to person, for everything that’s happening. They can sign up to free newsletters, bulletins, of course the barometer is there to be read.
They can follow up on what’s happening, they can then model the impact, know about it, raise it in conversation inside your business, publicise the dates that are coming, and just be aware that there is the opportunity and all change to make things better.
Certainly, one of them is to look at where you can source the technology. We see a lot more outsourcing now, with these changes, where you don’t actually have to worry about the compliance changes that are coming in, you can literally source from one place, and all of the technology will work moving forward, and the change programmes will be much less frequent, because you’re relying on a third party to do it on your behalf, typically in the Cloud, to use the trendy technical term.
Rich Williams: So, I think moving back to the payments’ barometer, for a moment, one of the most fascinating findings of this year’s barometer, for me, was that companies actually admitted to making late payments to their suppliers, in order to protect their own liquidity.
Ed Adshead-Grant: Yes. I would say that was disappointing, but perhaps not surprising. It’s something that has been happening for many, many years. There are now definitely regulations in place, with the late payment part of the value chain, and there’s the technology in place. So, if you’ve got the technology there, you’ve got the regulations in place, you’d think something would change.
The third element really is behaviour, just human behaviour on processing invoices, and cashflow, cashflow is still king in any SME, and that will take longer to change, even though the regs and tech are in place.
So, I think over time, probably the next phase will be a bit of a name and a shame chapter, which I think the regulations will put out onto the websites, for the worst performers on payme
Getting paid on time is one of the biggest challenges facing SMBs. In fact, research by Liberis showed that 72% of SMBs are spending up to 3 days every month chasing money they’re owed.
Enterprise fraud management capabilities and strategies are the cornerstone of securing your banking digital and mobile environment. Find out the best way to manage fraud across channels and how to create a unified single view of fraud throughout your organization.
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