Healthcare, insurance and financial services are among the largest verticals in the U.S., tied to trillions of dollars of transaction flows.
Corcentric CEO Matt Clark told PYMNTS in an interview that moving those industries into the digital age requires a mixture of technology, automating manual processes, and examining the back-office functions that can boost cash on the balance sheet.
The conversation came against a backdrop in which 71% of surveyed chief financial officers (CFOs) at finance and insurance companies and 58% of healthcare and medical company CFOs said they expect the digitization of their payments processes to speed up communication with customers.
Those verticals have friction surrounding payments and communication between providers, between firms, and certainly with end customers, he said.
“The healthcare space spills into the insurance world,” Clark said, describing the complexities, “and you have elements of B2B and elements of B2C.”
He noted that along the life cycle of a typical transaction in those industries, there can be several entities involved in a transaction — and payments can be split among different senders and recipients. Any disjointed payment strategies among constituents can amplify friction, keeping payments from getting where they need to go.
Thus far, much of the tech investment by these firms, at least as far as payments are concerned, has focused on the consumer-facing activities, he said.
Looking at B2B
There’s at least some urgency in the healthcare, insurance and financial services industries to modernize their B2B processes.
“The B2B parts of these transactions have been relatively underinvested and are a bit behind the curve from a payments digitization perspective,” Clark said.
An important strategy in improving payments lies with making the invisible visible — uncovering and spotlighting the interdependency of payments and communications across various verticals.
After all, when things are invisible, he maintained, uncertainty reigns.
“When is party A going to pay party B?” he said. “Is that transaction required for party C to get paid?”
Clark noted that transparency can resolve bottlenecks before those bottlenecks become serious problems. Clarity and transparency can improve if some of the most fundamental back-office operations undergo some modernization too. Optimizing accounts receivable (AR) and accounts payable (AP) flows has a positive ripple effect — improving working capital over the long term.
In turn, this can boost the financial health of the company overall, equivalent to several months’ worth of revenue, all without having to increase sales or cut costs. Companies will become more aware of their working capital positions as we continue to navigate macroeconomic uncertainty.
“You can really move the needle here from a working capital and cash flow perspective,” he said.
Looking ahead, he said companies in the healthcare, insurance and finance industries need to establish baseline metrics for their digitization efforts and track progress over time.
“It’s not a Big Bang approach,” he said. “It’s more of an evolution than a revolution.”