Back-Office Systems Go To The Front Of The Line

For all that’s written and said about what’s happening at the checkout, the point-of-sale and front-of-house in general, it’s the back office where the finance magic happens. At times like these, smooth workflows and reliable integration of the right tools can make all the difference.

PYMNTS’ October Back-Office Optimization Playbook, done in collaboration with Coupa and TransferMate, notes that “Vendors are taking fresh looks at their business-to-business (B2B) transactions as the global crisis interrupts cash flows. Small to mid-sized businesses (SMBs) are less able than their large counterparts to withstand late payments, and many have been pushing clients to switch to faster, more reliable methods rather than sending paper checks via postal mail. A new study by Mastercard found that 51 percent of small business respondents managed to persuade clients to digitize payments and that many SMBs anticipate sticking with these methods in the future.”

As digital payments become the norm, back-office systems will be pressed with higher volumes, more fraud and compliance checks to performs, and generally a higher degree of complexity.

Systems that can handle digital B2B payments, especially of the cross-border variety, are in the spotlight now as each transaction is vital, and fraud attempts are propagating widely.

Rationalizing The Investment

With so many companies soaking up information on consumer payments preferences and the digital shift as a precursor to investments in newer systems, CFOs need to rationalize the expense of updating back-office operations, especially given the COVID hit many took.

“Right now, measurable [return on investment] is the most important item when realizing technology efficiencies and re-engineering business processes. There needs to be a formula and a calculation that can show the return on investment to make the business case self-explanatory,” Gary Conroy, chief product officer at TransferMate Global Payments told PYMNTS. “This is more important than ever, and it’s accelerating the need for technology service solutions that allow for seamless integration in order to save time and money. It goes beyond just digitizing processes to making them flow with other resources in order to find solutions to payment challenges.”

After the investment is approved, however, technology upgrades and FinTech functionality that layers over existing systems need not disrupt during the digital transformation, and these investments pay dividends in time, as well as cost savings and preventing fraud.

“Companies that digitize their AP processes can reap myriad benefits, saving their teams time and freeing them up for other tasks while also paying vendors more quickly and accurately, cementing better supplier relationships. Digital tools for interpreting invoices and approving and delivering payments can therefore lay the groundwork for smoother business growth,” according to the October Back-Office Optimization Playbook.

Cloud-Based Systems ‘A Great Place To Start’ Optimization

Various forms of accounts payable (AP)/accounts receivable (AR) automation are one focal point of the back-office digital transformations planned or underway in response to the COVID economy.

As much as anyone wants to modernize right away, first you have to prioritize. As far as that goes, “Cloud-based platforms that streamline the spend management process are a great place to start,” Rajiv Ramachandran, senior vice president of product management and engineering at Coupa Pay, told PYMNTS.

“These platforms help companies efficiently drive resources where they’re truly needed and avoid fraud by digitizing reviews and approvals. On the back end, invoice management, payments, reconciliations, working capital and treasury management are all fully automated. Back-office teams are freed up from low-value transaction processing for higher-value work, whether digging in to resolve issues and expand digital processes or supporting strategic analysis and decision-making. [Chief financial officers] who understand these benefits and partner with IT leaders to make change happen will see rewards in their companies’ [abilities] to scale and grow,” Ramachandran said.