UK businesses have found themselves caught between a rock and a hard place this year. They need to reduce operational costs to survive in harsh economic conditions while continuing to meet rising customer expectations. Added to this, in the face of increasing volumes of digital payments, UK businesses must also ensure they have a robust payments strategy in place that helps, rather than hinders them, when it comes to having a clear view of their financial position.
One person who understands the tangible benefits a successful payments strategy can bring to businesses is Edwin Abl, Chief Marketing Officer of payments-as-a-service API platform Modulr. Passionate about tackling the sky-high $2.7trn a year cost of poor payment management globally – 80% of which is paid by SMEs each year – Modulr is on a mission to replace cumbersome and costly incumbent payments infrastructure with a simple API.
Here Edwin explains how effective payments strategy will help businesses to thrive as we enter 2021.
Never before has the world suffered an economic shock of this scale. Businesses were forced to close seemingly overnight, with thousands having to switch strategy to simply stay afloat. Many transitioned to trading online, as this was the only way to keep the business open during lockdown. But with this move, the inefficiencies in payments processing, and the impact of this on businesses’ ability to bounce back, has become stark.
Modulr recently interviewed 200 payment decision-makers for its latest report, “The price of payment inefficiencies”, exploring the hidden costs of payment processing, and the detrimental effects this is having on their businesses.
We found that in both large and smaller companies a ‘lack of visibility for operational costs’ is the top challenge when it comes to achieving strategic goals around payment process and money services provision. This is something that desperately needs to change if businesses are to survive next year. Only by fully understanding how and where their payments are being processed, will businesses be able to manage their finances effectively, and have a clearer view of their financial wealth.
Furthermore, customer, departmental and even supply chain partner experiences are becoming increasingly intertwined. As such, payment services innovation in 2021, must extend beyond customer touchpoints – happy employees who feel they are working with effective and efficient payments systems will be best placed to enhance the customer experience. And employees in commercial roles, who have bought into the benefits of efficient payments, will naturally want to extoll those benefits to customers.
Automation is also key to driving efficiency, replacing manual error-prone and time-consuming processes with real-time and responsive, digital ones. This is particularly the case when it comes to operational and payment processes. Over half (52%) of the large companies we spoke to said that team hours spent on payment processes was their biggest hard cost attached to payments. Compared with 26% of smaller companies who shared that view. This suggests that automation could contribute more to cutting the cost of payment processes in large companies and help drive efficiency so they can thrive, not just survive, in 2021.
Added to this, an innovative payments strategy can drive a more collaborative stakeholder ecosystem. As C-level roles become increasingly focused on the customer experience, the finance remit increasingly includes overall business operations. The role is evolving beyond just accounting, tax liability and funding. As such, closer collaboration between senior leaders can drive efficiencies and enhance customer experience.
Finally, our report found many enterprises are innovating, by adding finance and payments to vertical services. Businesses in sectors that did not historically offer bespoke-to-sector financial services, such as those in employment, travel and property, are innovating by offering these alongside their core business. Companies with a vertical focus are well placed to benefit as we move into the new year by offering new payment services to their existing customer base.
2020 has not been an easy year for UK business. However, if businesses look at their payments processes through a fresh lens to fuel efficiency, then there will be opportunities for them to drive further innovations that will make a lasting difference to their bottom line.