Editor's Choice Europe Open Finance

Behind the Idea: Payhawk

As vaccination levels increase in Europe and travel restrictions are eased, business trips are slowly coming back. Perhaps, pre-pandemic business travel is a thing of the past and hybrid work models are here to stay. Big sector conferences, such as the London Tech Week, Money 20/20 and Web Summit, are finally happening in person. People are eager to go back to face-to-face interactions. One thing to bear in mind is that as new variants arise, this return could be slower than expected. 

To make business travel an effortless task, Payhawk, combines credit cards, payments, expenses, cash management and pre-accounting into one integrated experience to give CFOs maximum control and visibility over their company spend.

The product is available in 30 countries and works on top of existing bank accounts without the need to change banks or ERPs. It’s a plug and play solution transforming payments and business spending to increase operational efficiencies and unlock the full potential of every enterprise.

Here Hristo Borisov Co-Founder and CEO of Payhawk explains why the revolution in managing business expenses has just begun.

Payhawk co-founders Boyko Karadzhov (CTO) and Hristo Borisov (CEO)

What has been the traditional company response?

Currently, finance teams are forced to use several disconnected tools when it comes to company spending – this makes their lives, and those of other employees, more difficult. A lot of the time, spending money involves manual processes like filing expense reports, processing invoices, creating bank wires and reimbursements.

What Payhawk does is to automate all of these. Our integrated system is the easiest way to manage company finances. We provide one integrated platform to manage all company spend, we allow companies to connect their existing bank accounts and load funds with one click, we issue cards for employees with built-in spend rules and collection of receipts.

Our platform also automatically reconciles and extracts data from invoices in more than 60 languages. We want the entire process to be paperless and painless.

How has this changed over the past few years?

Remote work due to the global pandemic has increased the use of digital products in B2B. Employees all around the world needed access to company funds to continue their work from home. They were either unable to access these funds as they were working with traditional banks, or employees had to use their personal card. This caused dissatisfaction and derailed tasks.

On another note, B2B transactions are often complicated by incompatible systems that delay them and add additional fees. Thanks to open banking and PSD2, B2B payments are processed faster than ever before. One example that illustrates this is SEPA Instant Credit Transfer. In many cases, businesses must wait several hours for a transaction to be processed. This can result in losses. SEPA Instant allows this to happen in seconds. Payment Service Providers can recognise that the SEPA transaction is an instant payment which allows them to process and clear the amount in real-time.

Payhawk, for example, connects directly to 3000+ banks across the EU and allows customers to pay via different payment methods. For instance, by using SEPA, clients can pay bills and reimburse employees’ expenses directly from Payhawk. By integrating their bank accounts, Payhawk’s customers have a holistic view of their payments. This comes from the combination of bank, cash, and debit card payments in a single process.

Is there anything that has created a culture of change inside the company?

Fintech solutions like Payhawk bring trust, transparency and empowerment to companies, no matter the size nor industry. Finance teams trust all employees with a company card enabling access to funds anywhere and anytime.

What ideas have been implemented?

We want to allow CFOs and finance teams to focus on more important tasks than paying invoices or chasing employees to submit receipts. Specially for companies in a growth stage, streamlining operations, hiring, and managing a bigger customer base should be their main set of priorities.

We know that every company is different and for that reason we offer several features such as spend policies, workflows and SEPA transfers that can adapt to the needs of a one-man business or a large corporation. We also offer integration with major ERP systems that automatically import ERP custom fields and tax rates.

Finally, as we say in our team, everyone is customer success and something else. We believe that to deliver a good product the customer is always at the centre of this. Every issue a customer has is posted on Slack. We try to solve it as soon as possible. We would like to become our client’s favourite customer success team, wherever they are. Managing company funds is one of the most tortuous tasks for finance and accounting teams and we want to make it simple and safe.

What benefits have these brought?

Finance teams and CEOs have full transparency and control of all company spend in one solution in real time. Second, all team members benefit from less manual work in oversight, handling expenses and pre-accounting. No need to handle any paper anymore. Third, the automated reconciliation for all transactions with each receipt eliminates the need for chasing missing receipts.

Finally, as we move into a more digital world, our solution allows you to digitize and automate all tasks related to employee expenses from when the transaction is done until the final bookkeeping.

Do you see any other industry challenges on the horizon?

It’s extremely exciting to see the wave of changes that will happen in the industry over the next few years. The biggest challenge in Fintech is regulation keeping up with innovation. The market is way ahead – this has always been the case. There is pressure for regulators to keep up. The reason things aren’t moving faster is because of uncertainty in regulation.

Another challenge is the large amount of VC funding being invested into the market. This leads to some companies bringing in innovation while others are quickly burning through cash. Some business models aren’t sustainable.

What we’re going to see down the road is that more Fintech companies will be making money from software rather than financial services. Instead of Fintech, it will be TechFin. The focus will be on software. Right now, Payhawk’s revenue is split 50-50 between software and financial services. In five years, 90%-95% of our earnings will be from software alone.

Can these challenges be aided by Fintech?

Yes, there is a lot of aid happening by Fintech.

First, the amount of investment around Fintech also increases the market for Regtech companies building software for regulators and compliance. Regtech companies provide regulators with more modern and accurate tools that prevent AML and fraudulent behaviours that result in faster and easier onboarding for customers, which is something that Fintechs happily buy.

Also, there are companies in different markets that start to open use cases for financial services. One of my favourite examples is a company called Inpher that enables data scientists to compute distributed data securely and privately without ever exposing it. They call it Secret Computing® and one of their financial solutions allows multiple banks to connect their data and build risk and fraud analysis without ever exposing their own data. You will be able to track models and identify movement of funds among hundreds of banks without these banks to collaborate directly. We are going to see a lot of innovation in the sector.

Author

  • Polly is a journalist, content creator and general opinion holder from North Wales. She has written for a number of publications, usually hovering around the topics of fintech, tech, lifestyle and body positivity.

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