In corporate payments, the term “silo” is synonymous with “headache.” The complexities of business transactions not only mean various financial functions, from accounts payable to payroll, are stuck in their own silos — it can often mean more silos within those disparate systems.
It’s a challenge that is quickly becoming unacceptable for chief financial officers and corporate treasurers demanding real-time, holistic visibility into company cash positions and activities. And while FinTech has evolves to offer corporates solutions to streamline a variety of individual processes, the financial services space continues to struggle to break down barriers at a wider level, according to Bhavin Turakhia, CEO and co-founder of India-based enterprise payments and banking FinTech Zeta.
“Most enterprises ... have many disparate systems, ranging from accounting to payroll to banking to taxes, etc.,” he told PYMNTS in a recent interview. “Everything has to be reconciled and data has to move from one system to another, which often requires manual intervention and creates a lot of additional friction.”
Cross-platform integration is key to solving this challenge, he added. That not only means combating disparities within a single financial process — for instance, integrating invoice processing with invoice payments in an accounts receivable function. It also means connecting accounts receivable to payroll, to accounts payable, to accounting and beyond, allowing data to move between all systems and platforms that have a hand in company finances, be it capital inflows or outflows.
Turakhia pointed to several strategies to achieve this level of cohesion.
One is to get the banks involved. Zeta, which recently announced a Series C investment round led by Sodexo Benefits and Rewards Service, is working both directly with corporates as well as their banking providers in an effort to obtain the clearest view of businesses’ individual pain points and more seamlessly connect them to tools that can address those areas of friction.
For corporates, Zeta offers a suite of employee payments, accounts payable and accounts receivable tools; for banks, the company provides commercial card issuance and hosting solutions. Tackling enterprise payments friction from both sides means promoting interconnectivity between corporates, their banks and back office platforms, he said.
The use of virtual cards is a solution, Turakhia said, that shows significant promise in promoting electronic enterprise payments and arming businesses and their banks with technology and data to break down silos. But he also pointed to challenges businesses face in making the switch from their manual payment behaviors.
“Any adoption of a solution involving payments will need to be integrated with existing financial and accounting systems within an enterprise, which takes a bit of time,” he explained, adding that change, in general, often creates friction and can be met with resistance in company back offices.
But as B2B payments embrace digitization, opportunities to access financial data and move it between once-siloed platforms will increase. To embrace those opportunities, Turakhia said the global financial services industry must jump onto shifts in the sector that promote interconnectivity.
“I think in the next five to 10 years, banking is going to become an API-driven, mobile-first, open platform — especially as the cloud takes a more prominent role,” he said. “What this means for enterprises is an easier integration between banking networks and corporate internal systems.”
Corporate payments are not going to improve overnight. The silos that have existed in the back office, as well as between corporate systems and those of their partners, are deep-rooted challenges with no easy fix. According to Turakhia, addressing the largest hurdle of a lack of interconnectivity between these portals will require promoting adoption of electronic payments, collaboration with banks, and the embrace of disruptive forces in the broader financial services space like open banking.
With its latest funding, Zeta is eyeing global expansion from its current markets of India, Asia and Latin America into Southeast Asia, Europe, the U.K. and U.S. — reflective of its position that addressing B2B payments friction must also be done on a global scale.
It may be a tall order, and the stakes are high for B2B payments, a multi-trillion dollar industry. But the benefits will be worth the effort.
“Digital payments and virtual cards have a much bigger role to play in the corporate world versus the consumer payments world,” he said. “Corporate payments across the world translate to trillions of dollars in transactions and dwarf consumer payment amounts. The pain points are also much bigger, as there are many more people involved and many more filings and regulatory aspects to consider. Thus, digital payments and virtual cards have much more value to enterprises.”