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Podcast Transcript

John Gaffney: Welcome to the Payments Podcast. This episode is called The Rise of the Connected Financial Officer. You know, the CFO, the Chief Financial Officer is no longer the executive that sweats over spreadsheets and holes up in the office until late hours, trying to make sense of the money coming in, and the money going out. The CFO is now the Connected Financial Officer. The responsibilities and crucial functions of finance have not been diminished with this change. In fact, it has been enhanced.

Today, the CFO connects to C-level peers, allied departments within the company, and to partners. All of this is enabled by the connection to digital transformation, which has made corporates more agile and accurate in liquidity and cash management. Now, with the Association for Financial Professionals Conference in the books, we've invited two of our executives to add some perspective to the event, and the changes coming for the new CFO.

Hi, my name is John Gaffney, I'll be hosting today's Payments Podcast. Today, we are joined by Tracy Kantrowitz who is the Vice President Marketing for Treasury at Bottomline. Welcome, Tracy. And Paul McMeekin, who is the VP Solutions Marketing and Channel Enablement at Bottomline. Tracy has been a senior exec at several financial firms during her career, and was most recently, Chief Marketing Officer at Treasury Express. Welcome, Tracy.

Tracy Kantrowitz: Thank you, John.

John Gaffney: Paul has also been a marketing leader in the fintech space for more than a decade. He also serves as an adjunct professor at the University of Omaha, where he gives a real-life view of marketing and business to future business leaders. Welcome, Paul. So, let's start by going to the AFP Conference which I know you guys both attended. I'd like to get a sense of the energy at the event, as well as some of the concerns of the attendees. Tracy, how was the energy in your perspective at the show?

Tracy Kantrowitz: Hi, John. Hi, Paul. Glad to be starting with the AFP Conference because, quite honestly, it was such a wonderful experience, especially after the nearly two years that we've all had being remote. So, the energy was wonderful. There was great excitement throughout the conference, being face to face again. One of the things I'd also like to call out for AFP and give them some kudos is that they did a hybrid programme this year, and I think that was really well done on their part, to be able to offer options for all the different personal situations for all the participants in the industry. So, again, well done to them.

From a live perspective, it was very clear that those who attended in person were there with purpose, I feel, to really be able to interact and to learn from each other, from both a peer perspective, but also, just to see what's going on in the industry, in the past few years of virtual learning for some of these conferences. It is very much a one-dimensional experience. So, I think there was a lot of energy with everyone being able to interact with each other.

John Gaffney: And I know that some of your concerns that you heard from some of the attendees had to do with three things, liquidity, speed, and data. Could you talk about that a little bit?

Tracy Kantrowitz: Absolutely. We had some great conversations set in a lot of wonderful, very eye-opening sessions, and there was one core theme that we'll talk about in a second, but the practical- the key practical areas that you just mentioned, liquidity, speed, and data, kind of rolled up to an overarching theme that was very apparent, from my perspective. And that resounding theme that we heard from the corporates, was really to increase agility, in being able to respond to a new crisis, the next crisis that's around the corner.

And as I mentioned, all of these three things play a role into being- to achieving that preparedness, being able to be that responsive. You even mentioned in your introduction, corporates are looking or have become more agile, and more accurate in their day-to-day financial management. So, these key areas certainly contribute to being able to achieve that goal.

John Gaffney: Paul, so Tracy was talking about the energy at the AFP conference, and some of the concerns which were from her perspective around liquidity, speed, and data. Your observations of AFP?

Paul McMeekin: Yes. Great question. Total agreement with Tracy, high energy. Attendance was a little bit lighter than previous years, but as Tracy said, people there with purpose. It was great to be back in person. Meeting and greeting people and it was a thoroughly enjoyable experience. And so, to your question, I think there's probably three main takeaways for me from a bank slash corporate perspective, and I use that intentionally. I think there's a crossover between what banks are asking on behalf of their customers, and what customers are asking their banks.

A lot of good – and I hate the word ‘synergy’ – but a lot of good synergy between the wants and needs of the customers and the way banks are thinking more like technology partners. And so, sticking on that theme of technology partners, the banks are really thinking about embedded finance. How do they offer finance, and financial services, and tools, and payment tools, to their customers, all in a neat tied up bow, in one single offering?

What we saw was a movement towards an ecosystem. And so, and yes, past, the talk has been about an ecosystem, but it was really single threaded about multiple partners, multiple single points of contact. Where now, it's a, them, the banks stitching together a full offering, having their partners working with and for each other, and all with the ultimate goal of providing a better service to the end-user, providing a better service to the customer.

In one example, a bank was telling us that, "Hey, we're using your AP automation tools, and because of that, and because of the value of driving them, we can offer better commercial value at better rates on their commercial loans, as well." So, I think it's taking this all-encompassing view of what the customer wants. Pulling multiple providers together to create that ecosystem for the bank. And the third trend, which was in every single conversation was foreign security.

John Gaffney: So, Paul, another question for you, or an observation. I know when I spoke to you after the conference, you said that banks seem to be more fluid, fluent in technology, not fluid. And there was a better understanding of digital transformation. That would seem to be a very important development if there's more crossover between banks and corporate? So, would you agree with that?

Paul McMeekin: Yes, absolutely. And getting- the conversations I had have moved beyond- this is not just AFP, this is the last probably 18 months, moved beyond the like, "Hey, let's- to use that really bad term, let's stick lipstick on a pig, and call it digital transformation. Let's put a new UI on that." And people are really thinking through of- it is, yes, it's the cool and sexy UI, but it's that- those backend processes that digital transformation is not just what the end-user sees, but everything before that.

Going from 15 steps in a process, and using technology, digitising cheque payments, digitising invoices, down to three steps. So, rethinking, not just like the end part of like, "Hey, we have this cool and sexy UI where you can check your bank account balance." But all those things before that of having a PIN and going to the bank account. Rethinking and reimagining what those processes can be. And so, the banks I spoke to were really in focus on the customer outcomes of, "Hey, if we have a customer, focused on automation, how do we best get them to 100% digital payments, for example?"

So, banks have a play for their customers, and they really understand of their customers' outcomes, and how they can help them, take them on the journey, John.

John Gaffney: Thanks. Tracy, you've been living, breathing, and conducting, your career in a period of great change, in terms of treasury transformation. We've gone from automation to cash management. The trend that seems to be most impactful though is real-time treasury. Could you explain first what that is, and second, how do you think it would affect both banks and corporates?

Tracy Kantrowitz: John, you're right about that, that treasury needs to be conducted more instantaneous, more real-time, or in an always-on approach. And that goes back to what we were saying before about the need for agility, right? And the need for accuracy, and being able to respond to a crisis, or to be able to manage to avoid volatility and crisis. So, that's what we're talking about when we talk about real-time, and it goes back to those three areas that we mentioned, right? Liquidity, speed, and data.

All of that, in real-time, from a liquidity perspective, during the crisis. Access, knowing where your cash flow is, having access to additional liquidity, that was paramount, right? Either by companies reserving cash, getting their receivables in, or leveraging some of the banking products and instruments that would allow them to access more methods, more means of liquidity. And corporates had to have that visibility to be able to know those positions, and to be able to access it.

And that goes directly into the speed or the concept of real-time. In order to keep businesses volatility-proof, or instant in that always-on capabilities of managing treasury, like I mentioned, that visibility into the cash positions is really, really required to understand what the financial health is of the business. Not just once a week, not even just once a day. The days of being able to deal with status quo manual processes, of having to take half a day to get your cash position is gone, right?

All data is accurate data, so it's very important that, in terms of being able to have visibility, into liquidity, it is visibility into your cash positions, and being able to make decisions is key. We saw just working with some customers before the pandemic, they would be able to do their cash position, once a week, once a month, once a day, as I mentioned. But was no longer the case, right? They were running it instead of four times a week, they were running it four times a day. And the inputs that were required to really get that accurate picture of their position, expanded as well.

And that brings us to the data element of it, right. There's been this convergence. In order to be able to get a full comprehensive understanding of the positions, right, the answer to being able to manage that financial help is found in the data, right. Again, looking back at that customer that I mentioned, they were trying to achieve the position four times a day, but they also expanded it from three different inputs of various data, with financial data within the business to about 17 different inputs.

So, the complexity of achieving that position was much more complex, right. The answer to all of these questions that a CEO or CFO would have in terms of the financial health, and position. It's found in the banks. It's found in the ERPs, right, and the accounts receivable systems everywhere. So, without having that integrated access to data, in a very quick and real-time way, it makes it almost impossible to be able to derive the right decisions and to understand which actions need to take place in the business.

And that brings us to the next question, the next part of your question that you mentioned in terms of what are the banks doing to address this? I would say the AFP experience was really great- was a great research and validation experience, in my opinion. We've been speaking anecdotally and working closely with customers, hearing some of their challenges, in terms of what their real needs are. And then I think Paul hit it on the head, where it's taking it down and getting a real practical look.

And digital transformation, it has been a buzzword, it will continue to be a buzzword. If the support system for corporates don't take action and make- take a practical approach to being able to support them. And really, what we heard at AFP, what we've been hearing from customers, is that transformation is real. It is top of mind, but from a big epic undertaking perspective, it's just not possible. So, what corporates are really looking for are pragmatic- they're looking to create strategies to transform very pragmatically, or incrementally.

And that's where we are seeing things in technology providers such as Bottomline, really trying to align with that. We have all these wonderful ideas of innovation and we get excited for products that we could launch, but unless the corporate who would benefit from it, it's realistic for them to achieve and implement. It's just not feasible. And we're seeing some of the- some examples that we're seeing, we mentioned liquidity. Banks are doing a wonderful job, right now, really trying to very realistically align, like I said, to those corporate needs, right.

We're seeing a lot more banks investing in liquidity services, and coming up with those types of solutions where they're working with technology providers, TMS providers, such as ourselves, in particular, where they're trying to embed and create a centralised repository for different financial instruments. Different short-term investments that the treasurer, right, or the corporate finance leader could really take advantage of, once they have their visibility, once they've been able to move their money around, make the right decisions, and decide they need to execute.

Those liquidity solutions are right at the fingertips of many corporates because that's where banks are really starting to invest in, right. Paul mentioned the ecosystem. It's really been a priority for the banks and the fintech providers to create an experience of centralisation and instant real-time access for everyone, and that's why we're starting to see not only just from the banks' side, but the ecosystems, right. Paul mentioned embedded finance, right, and it's almost embedded transformation, that a lot of the technology providers are really trying to incorporate in their strategies, right.

Whether it's that instant access to liquidity, whether it's being able to use APIs, being able to create seamless experiences that allow treasury teams to work further and faster with other parts of finance. We're seeing, even in our own strategy on Bottomline, from the Bottomline side, we're seeing more focus on incorporating and unifying accounts payable automation, or accounts receivable technology and capabilities into core treasury management systems.

Because this is the experience that's really going to create that unified approach. It's going to allow corporates to have faster access to the data that's going to make their job more intelligent, and more actionable in real-time.

John Gaffney: Tracy, thanks, real-time treasury is certainly the way of the future. Paul, let's come back to you. Let's come back to your comments about being more practical, and bringing some of the CFO concepts and connected treasurer concepts down to a practical level. What are the most important levels in that practical approach? I'm going to ask you that first?

Paul McMeekin: Yes, and I think it all starts with data. So, Tracy nailed it. That real-time data, that real-time data feed. And so, I'm going to answer it two ways. One from the accounts payable perspective, and one from accounts receivable, both rolling up to the CFO. Sometimes, we talk about them, two distinct entities. There's a payer and a recipient, but corporates, they're both paying, they pay and get paid, right. So, thinking from the AP side, three things which immediately came to mind is improving cash flow by monetising payments.

It's a bit buzzable [sic], let me dig a bit further, improving AP efficiency and the classic, mitigating the risk of payment fraud. So, diving into it, what is improving cash flow by monetising payments mean? It's going back to what Tracy said. It's getting visibility from the data, and from an AP perspective, it is helping customers avoid late payment fees of if you know where an invoice is held up or a payment is held up, you simply get an alert, for example.

Some customers we spoke to, it's like, "Oh, the invoice was sitting for approval on my key for two weeks because we didn't get alerted it was there. No one thought to ask." So, there's simple features and functionalities like that to avoid late payment fees. But also, to capture early payment discounts. And what Tracy talked about was having that full visibility, and when I think of that, it's like, "I can model out, hey, if I make a payment early, I can get this early payment discount. Or do I want to keep that money in my bank to get more [ ___ 0:19:41] float?"

And if I make my payment early, can I get better payment terms in the future from my strategic vendors? The second one from monetising payments is maximising rebates on the digital payments. So, from our perspective, about three-fourths of our customers get 50% more rebates after joining the network. And they come to us, and think, "Oh, man, I want to check payments. What do you mean, not just taking out cost, but I can get money back?" So, that's a big thing, a big driver for accounts payable and CFOs love to see that, right.

And so, the second one is improving AP efficiency or as I like to say, improving employee morale. And this can be in two ways, right. So, one is eliminating steps in the invoice to pay process. And that can, as I mentioned earlier, going from 15 steps to three steps. That's super important. But one customer, she talked to me about we have nine FTEs today. We talked through about things we could potentially help them with. And then, at the end of it, she's like, "Wow, that would save us 79 hours a week."

That's like two FTEs. So, what would you do with those 79 hours? And her first response was, "Well, I wouldn't have to work night times anymore." Which is great, and that's why I said the employee morale angle. And the last one, of course, is mitigating the risk of fraud. So, knowing the identity of who you're sending money to, and having that vendor authentication of every single person on the network. So, being able to trust your payment is going to the person it's supposed to be.

But also, when someone tries and spoofs you to send payment, that you have a partner who can catch that and prevent that from happening as well. So, that's like the AP side, and the AR side, I think is just as important. The top challenges that I heard and was listened to, was slow payments. So, how do I get paid faster? How do I reduce my DSL, my DSLs outstanding? How do I improve my invoice to cash in the bank time? And so, getting paid faster.

I would probably say, six out of ten conversations I had around accounts receivable talked about slow payments, and how do I get money in the bank faster? The second one that came up, probably about half the conversations was manual processes. How do I- the steps that I have to take to get paid faster by moving out those slow archaic processes, the costly error-prone processes? How do I advance my AR function? Like AP has went through a transformation the last ten years or so, how do I get my AR function as well?

And I think the last two, mitigating payments fraud. Again, unsurprisingly, was in, I don't know, every conversation, it seemed like, and high volume of cheque payments. I talked about taking the cost out of payments, cheque payments on the AP side, but on the AR side, it is super manual as well. So, that lady who had 79 hours of savings in her AP department, it's on the AR department as well. It's a ton of time savings. We talk about embedded finance, the connected CFO, and all it comes back to data driving this, and also digital transformation.

Knowing where you are now and where you want to be is the hardest part, I think, of really understanding your baseline and looking towards the future. And there's a ton of options to help you get there. So, John, I think, overall, from my perspective, I know we're going to end with Tracy, but from my perspective, AFP was a great experience to get there, a ton of conversation about embedded finance. A ton of conversation about the connected CFO, all around digitising things and every conversation I had was moving beyond the headlines, getting into the practicalities, and returns on investments, and how do I actually get there?

John Gaffney: Thanks, Paul. That's a great answer. Thank you very much. Tracy, we're going to go to you for the last question in this podcast. Let's revisit the three things that were most important here, liquidity, speed, and data. How can a partner help address each one of these for corporates? So, let's start with technology, and then, I'll ask you to go to the two other areas.

Tracy Kantrowitz: Sure, no problem. Thanks, John. So, as you recall, we mentioned at the top of this conversation, liquidity is vital to an organisation, right. Managing it, being able to see it, and be able to make quick decisions, and be able to access all the different areas of liquidity is just vital to an ongoing business continuity from a financial perspective. And it's also vital in terms of being able to achieve that agile reaction or preparedness for any volatility, or the next crisis as we mentioned.

Part of being able to do that is really speed and data, and that's why all of those three things come together, right. You have to be able to react quickly to liquidity. You have to be able to make decisions quickly, from a liquidity decision making perspective. And of course, in order to do all of those things, you need data, right. And supporting all of those is technology, as you mentioned. So, a technology partner should be focused on delivering an experience to corporates that actually pace with the stages of the corporate's transformation strategy, and their priorities, right.

One of the themes that has come out, not just at AFP, but one of the things that we're always seeing is this notion of hyper-automation being out, right? And intelligence and integration being in. It's no longer sufficient just to automate, right? To move from manual processes to technology. It's the silos that will prevent real-time liquidity management, real-time treasury management. It's the silos of different systems that will keep data segregated and prevent corporates from being able to achieve that comprehensive visibility and intelligence.

So, from a technology perspective, in order to support this real-time liquidity and enable the timing and the data integration, it really has to be a unified approach, that ecosystem that we've been talking about. So, that's the type of model that technology providers should be investing in, and should be directing their innovation towards.

John Gaffney: Alright. Thank you, Tracy. That's a wrap. That's the Rise of the Connected Financial Officer, our Payments Podcast. I would like to thank Tracy Kantrowitz, Vice President Marketing for Treasury at Bottomline. Thank you, Tracy. And thank you to Paul McMeekin, VP Solutions Marketing and Channel Enablement at Bottomline. It was a great session, a thorough report from AFP and a lot of perspective on how the connected financial officer is changing. Thanks for listening.

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