How FinTechs Help Corporates With Cash Application Amid COVID-19

accounts receivable

FinTechs are keeping an eye on cash application trends amid uncertain times caused by the coronavirus. DadeSystems CMO Tom Berdan told PYMNTS in an interview, “We basically woke up to a new world relatively quickly.” Now, more than ever, he says, cash and cash collection are vitally important to organizations. Corporates have fixed and variable expenses, and, now, they are trying to manage them with renewed concerns.

The overall effect of COVID-19 depends upon the company, which could be severe or what Berdan describes as “serious but manageable.” Many companies likely fall into the latter category, he said. There is also a very small tail of the bell curve that would have minimal to no impact. But, for everyone else, Berdan said, cash collection is going to be a significant concern.

When it comes to the cash cycle, customers place an order, and a credit check likely occurs. Businesses then go through a fulfillment/shipping stage, and they invoice a client as well as collect payment. They want to accelerate that process when they are trying to collect cash. And they now have complications in terms of their workforce (i.e., remote work) layered on to that process. As a result, even firms that have some level of automation need to think creatively.

Many companies rely on a bank/service provider to handle outsourced lockbox processing. One of the first calls they should be making to their provider, Berdan said, is to ask how COVID-19 is impacting them and if the provider’s workers are allowed to come into work. If they aren’t allowed to come into work and the firm’s checks aren’t getting picked up, companies need to find an alternative for that process because they can’t let that cash sit idle.

If companies are facing that challenge, they need to look for an auxiliary or supplemental operation. That could entail putting a scanner in the company’s office to remotely scan all the checks. And, in many cases, the FinTech has customers that still use a lockbox, but they still have some centralized operation that receive checks. Those clients might have to convert that to be a full operation.

A worker from the company might have to go to the post office, pick up the mail and process the payments within the company. And they don’t have to key in payment data using the capabilities of artificial intelligence (AI) and robotic process automation. All of those payments can be scanned and automatically reconciled as part of that process. As a result, if the lockbox is temporarily out of business, companies may be able to take on the operation themselves.

Companies may also be able to turn on the acceptance of credit cards on payment portals. Credit cards are not only convenient for the payer: If companies receive a payment on a credit card and know that the funds will be arriving, and they may be willing to pay the interchange fee at the moment. Companies can also use DadeSystems’ PayNow check request service through which Berdan said the FinTech can “push a payment request right to the payer,” making it easier for business to collect as much cash as possible in these uncertain times.