Digitization Efforts Bring Unexpected Knock-on Benefits to Finance Operations

CFOs and treasurers are pragmatic people who spend a lot of time preparing for worst-case scenarios. Small wonder they’re equipping their companies with the digital tools they need to survive — and thrive — in any storm.

In a series of conversations on digitization, financial leaders in sectors ranging from lending to workforce payments sat down with PYMNTS to share lessons they’ve learned about embracing digital and instant payments. They also shared how these payments helped their companies make workflows more efficient and address labor shortages, all while making the daily work of financial professionals more impactful and less manual.

Part of what helps CFOs sleep at night is that the transition to remote work and cash flow uncertainties has been a huge catalyst to digitizing finance operations.

Sometimes it’s the little things: No more hunting down people to sign off on an approval or report in-person, for example.

Sometimes it’s bigger things, such as speeding cross-border payments by simplifying treasury operations, or securing working capital more quickly to keep the lights on during tough times. But in ways big and small, digital payments and automation are making operations a lot nimbler and more efficient — giving finance leaders a bit of relief from everyday cash flow concerns so they can focus on big-picture challenges.

Transparency and Efficiency

To be sure, many CFOs are focusing on digitizing the financial workflows in their companies right now. Jo Jagadish, TD Bank’s head of corporate products, services and innovation, recently told PYMNTS that she has seen many companies break the technological inertia at their organization and invest in streamlining accounting functions during the pandemic.

When businesses shut their doors during the pandemic lockdowns, they turned to TD Bank for tech-forward solutions that could help them “keep their lights on,” she said, before digitizing core payments and accounting functions that ultimately would make their companies leaner and more nimble.

Since then, Jagadish pointed out, interest in engaging with online lending platforms, bringing invoicing functions online and digitizing accounting have persisted.

That said, one thing that worries Visa Treasurer Colleen Ostrowski is that cross-border payments still involve too much friction for small businesses. She said that businesses can sometimes find themselves having to shut their doors because payments took too long to settle, and they couldn’t handle a few days without liquidity.

Learn more: Visa’s Ostrowski: Volatility, FX Challenges, Real-Time Payments Keep Treasury Role Interesting

Cloud-based treasury-as-a-service software helps businesses outsource their treasury functions and streamline their cross-border payments. If “anybody can source inventory across the globe,” then “we need to bring that same concept to business payments,” Ostrowski said.

Ostrowski also believes that application programming interfaces (APIs) can make currency exchange less of a mystery than it was before, as treasurers have more tools in the toolbox. A big part of her vision lies in reimagining reconciliation and ensuring that critical data that underlies the settlement of transactions is included in the process.

Addressing Labor Shortages

Another way instant payments are expanding their footprint beyond their core objective is by allowing companies to better retain employees and independent contractors through improved cash flow. Drew Edwards, CEO of instant payout service provider Ingo Money, told PYMNTS that he “doesn’t see growth going back [or reversing] across sectors.”

However, he does think that FinTech companies might start charging for them, which will be a loss for contractors and other professionals that rely on these services to help them maintain their cash flow.

Meanwhile, the CFO of workforce payments platform Branch, Brian Whalen, said that troubles in the macroeconomic environment have made instant payments all the more relevant.

“All workers have been facing a cash crunch — gig workers in particular,” Whalen said.

See also: Macro Challenges Drive More Business to Full-Blown Payments Automation

Some financial professionals are focusing their attention on blockchain, since it not only enables faster payments, but also makes them more transparent and affordable.

With blockchain, Zumiez Treasurer Graham Merrill said, “There’s full transparency — and there’s no more worrying about a middleman or third party in accounting for payables.”

Financial professionals have more impact

The digitization leads to an expanded definition of financial roles within companies. Merrill pointed out that due to the digitization of accounts payable, he’s been “seeing a transformation of AP from more of a processing function to a customer service, and analysis, function within a company.”

Ostrowski also noted that the role of the treasurer is also changing fast, saying, “We’re becoming more than just custodians of the balance sheet. Now treasurers can be and will be strategic partners to help unlock the growth potential inherent in a business.”

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