Some universal challenges impact accounts receivable (AR) effectiveness across sectors, such as payment delays and complications around processing different forms of payments. However, the intensity of these various pain points depends a great deal on the nature of the industry and market conditions.
For technology firms, financial suffering from fraud is the top AR pain point. While this is a key pain point cited by organizations overall, it is particularly likely to cause problems for technology firms.
In fact, 19% of technology firms say financial fraud is their top AR pain point, according to the “Smart Receivables Playbook,” a PYMNTS and Flywire collaboration. That places it far ahead of the second-ranked frustration, managing multiple vendor relationships, which is cited by 12% of technology firms.
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Coping with Growing Concern About Fraud
Widespread concern about financial fraud was highlighted by the Monday (Jan. 17) report that cryptocurrency exchange Crypto.com suspended withdrawals on its platform after users reported “unauthorized activity” on the platform. The withdrawals were reactivated in the early afternoon Eastern Time.
Read more: ‘Unauthorized Activity Leads to Withdrawal Suspension on Crypto.com
Financial fraud has been a mounting concern for companies across the economy as bad actors have sought to exploit the growing share of economic activity online. Not only are firms’ funds at risk but also those of their business partners. These risks must also be factored in how a company calibrates its cybersecurity strategies since ineffective fraud detection can create “false positives” and improperly block legitimate payments.
The challenges facing AR departments are magnified when companies do business in foreign markets, and this often comes with the territory for technology companies. The Payments 2021 study found that every firm surveyed made at least some of their sales outside the U.S. and 51% made at least 20% of their sales across borders.
Despite their lackluster view of the efficacy of their payments operations, technology companies are spending significant shares of their budgets (2.7%) on these operations. A large share of technology firms’ spending likely goes to third parties to handle various complexities around payments and billing.
Choosing a Payment Solution Provider
More than half of technology sector firms work with at least one vendor in addition to their payment processing partner. Technology companies are most likely to turn to vendors for support in fraud detection, with 29% of these companies reporting that they work with vendors in this area.
Looking for alternatives to the ways they are now doing things, a growing number of companies are placing AR digitization at the center of their investment strategies. The pandemic has lent new urgency to optimizing back-office payments operations as the crisis has severely disrupted business relationships and scattered work teams from offices that once hosted vital on-premises payment systems. Organizations need cloud solutions that can keep AR processes up and running, and they may very well discover a host of other benefits that range from security to efficiency.
When choosing a payment solution provider that can offer comprehensive, modern AR capabilities, there are several key considerations financial decision-makers at technology firms should bear in mind. Among them is the question of security: Does the provider employ data and payments protection protocols that are certified by accredited international bodies?
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