CFOs With a Taste of Digitization Want Even More

“If it ain’t broke, don’t  fix it.”

That’s about the attitude many companies had toward payment digitization before the pandemic’s overnight closure of businesses changed all that, instantly catalyzing finance chiefs to embrace the need to streamline their payment processes.

As Jo Jagadish, executive vice president of innovation at TD Bank, recounted to PYMNTS’ Karen Webster, businesses of all sizes were suddenly rushing to adapt their payments infrastructure to the challenges of the new world. It’s a transition, she said, that would heighten their interest in online invoicing and accounting, as well as upgrading other processes, such as digital payment systems and account management, that launched then and continue today.

Surviving Through the Pandemic

The shift in enthusiasm towards digital payment solutions was most pronounced among small businesses. Jagadish said that “a lot of [small] businesses were trying to keep their lights on, and so they relied heavily on just digital engagement in getting paid.”

She noticed that during the pandemic businesses were eager to experiment with new solutions that weren’t heavily marketed in the past. For example, TD Bank saw significant interest in its online accounting solution once businesses went remote during the lockdown.

According to Jagadish, small businesses can be “incredibly cash flow sensitive,” so they were enthusiastic about solutions that could offer them payment in five days, as opposed to the traditional “27 to 41 days” — a cash flow game changer for any business that transitioned all its operations online.

As far as real-time payments go, Jagadish says the interest is there but it’s “limited to use cases that are probably not as ubiquitous as you and I probably thought when RTP was first being launched.”

At the same time, she said, companies were also eager to engage with online lending platforms, which aside from PPP loans, were one of the only ways businesses could apply for lines of credit during those uncertain days of limited access and hours.

Lasting Change in Attitude

Today, the post-pandemic era has been filled with different risks and challenges, like the labor market shortages and supply shocks due to the war in Ukraine, which continue to fuel the digital shift and prompt businesses to look for new ways and solutions to digitize their payments strategy and more.

Jagadish speaks of a momentum that exists now that was never present before.

In fact, a recent PYMNTS survey found that three-quarters of CFOs at large companies find payment operation digitization “very” or “extremely” important to their business goals.

In the aftermath of the pandemic, Jagadish saw many treasury departments “secure the funding and the investment that they’re going to need to automate and improve and digitize their back office.”

Add in the rockiness of the current environment, and she says many treasurers are again looking to make long-term lasting investments that are going to be relevant in a few years, in lieu of smaller, niche “hobby projects” that might be soon forgotten.

Rising interest rates and the heightened risk of recession have also inspired much thought about liquidity management, she added.

While prudence and practicality will always be the hallmarks of daily life for most treasury executives, she said certain types of deep-pocketed tech companies or banks might enjoy a bit more flexibility when it comes to dreaming big about the future, or making investments in such non-core areas as the metaverse, next-generation payments, or cryptocurrency projects.