March 22, 2021
4:00 minute read


Payments and cash management

Innovative Payments Tech Can Aid Business Liquidity When It's Needed Most

While financial health is always top of mind for businesses, concerns about liquidity, cash flow, financial management practices, business resilience and operational risk took center stage this past year, even for the healthiest of businesses.

This was ever apparent in the experiences of smaller business. Challenged by both access issues and major impacts to cash flow, small business has become a focus of longer-term thinking about their resiliency.

The banks companies do business with are also more aware of customer risk profiles due to the current economic conditions and the adverse effect they might have.

There’s an increasing focus on bringing solutions to smaller businesses that bolster their resiliency on the payments and cash lifecycle front.

Liquidity sensitivity drives companies to procure tools to help them determine and execute the right strategies to decrease days sales outstanding (or DSO) and get paid faster. As such, prompt invoicing and offering "Pay Now" options on invoices are becoming increasingly more important. "Pay with Card" as a liquidity tool is also critical across the board. We should expect to see more enablement on the payments and cash management front where solutions for small business are concerned.

Opportunities for small businesses will flourish as value chain disruption continues and the services they require become more widely available and more numerous. That includes services such as easy credit access, alternative payment options and fast access to funds. The accompanying reduction of merchant fees will encourage small businesses to explore these avenues with increased urgency.

Finally, the success of the Paycheck Protection Program proved that credit application, approval and funding can be accomplished in a dramatically quick fashion. This speedy turnaround set a new operational standard and introduced frictionless access to credit in support of business resilience.

Savvy banks that recognize the multitude of opportunities coming out of 2020 will be poised to meet changing expectations and become true partners, with a real stake in the success of their small business customers.

Creating easier, faster experiences, driving success for businesses in managing their payments and cash lifecycle needs—all of this will form from the footprints of another trend. That trend is greater collaboration and orchestration among financial and fintech players, together with businesses.

Just as APIs that seamlessly integrate with third-party solutions opened new worlds of interoperability, fintechs and financial institutions who collaborate with businesses will benefit from an “integration advantage.” That will make them well positioned to drive innovation and expand offerings that benefit end-customers everywhere.

Successful financial service providers and fintechs will embrace digital ecosystems, rather than occupy siloed platforms. Customer-centric experiences will result from orchestrated partnership and tighter data integration. Collaborations will end a protectionist era and introduce seamless interactions across multiple apps, to scale, without the need for multiple log-ins.

We can’t ignore that as these trends rise, so too do the risks from fraud and financial crime. For example, contactless technologies present obvious vulnerability when it comes to authentication, while the increasingly frictionless and fast approach to transaction exposes areas to be exploited, making insider fraud a real worry. Removing friction can’t compromise security, so introducing multi-factor biometric authentication and automated AI fraud detection will be a must.

That’s just one example of where new thinking about collaboration can be used in the fight on fraud and financial crime. Chaotic times and the uptick in technological reliance have proven fertile ground for bad actors. Business email compromise, authorized push payments and other types of financial fraud saw a huge uptick during the pandemic and aren’t showing signs of slowing down.

Collaborative partnerships among banks, businesses and fintechs can facilitate the sharing of knowledge—and more “hub” thinking among all. Understanding the latest tactics employed by financial criminals and the latest advancements in prevention techniques can present a united front against them.

These partnerships will prove that it’s no longer about competing for the customer, it’s more about working together to find a way to bring greater benefits and security to every customer.

As we emerge from a long pandemic winter, many are worried about what the rest of 2021 will hold. And for good reason. We watched 2020 unfold with uncertainty as the only constant. One disruption would stumble into another and so on and so on.

But whatever this year ahead has in store, the resilience of people and processes over the last year has proven out. There are sufficient signs of optimism considering the interesting trends in automation and personalization capabilities, the renewed attention on small businesses, and the focus on well-orchestrated collaboration.

By Jessica Cheney

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