Tag Archives: finance

Forget Procure-to-pay – The Future Is Procure-AND-pay

How can virtual card payments improve the procurement experience?

By Gorodenkoff / Shutterstock

Traditional card-based solutions link one card to one individual. Virtual card solutions, on the other hand, link one ‘virtual card’ to one transaction. It’s a technology that has the potential to add real value to corporate payments – especially as controls on credit limit and dates of use can be set per transaction – but it’s one that is yet to be implemented across the entire corporate environment.

Integrating for efficiencies

The key to unlocking the full potential of virtual card solutions is about partnerships with existing procurement systems, especially in meeting the needs of multinationals.

“In B2B payments, we’ve had good traction for [our solution] in mid to large corporates, but utilisation for the very largest multinationals has been limited, and that’s because of their significant investments in sophisticated procure-to-pay (P2P) software,” says David Price, Managing Director of Client Coverage at Barclaycard .

Those systems allow businesses to procure in a compliant and cost-effective way, and provide a good experience for the user, except when it comes to payments.

The impact on buyer experience

Previously, procurement teams had to step outside the P2P environment to complete payment through a separate portal. Now virtual card platforms are being integrated into procurement systems including Coupa, adding ease of use and another option for users within a technology that is already trusted and familiar.

“From procure-to-pay to procure-and-pay”

“As soon as transactions are authorised, virtual card payments are triggered automatically so there’s no need to leave the environment or to process payment manually,” says David. “The common terminology is procure-to-pay; through integrations, it’s a move towards procure-and-pay.”

Integrated solutions have the potential to improve the buyer experience further, bringing additional benefits to the business such as greater efficiencies, control, data insights and cash flow flexibility.

Onboarding efficiencies

End-to-end procurement costs are often high because of bureaucracy and paperwork, with efficiency gains made elsewhere in the process lost at the point of payment. That’s especially the case in the tail-end spend of large volumes of small-value transactions. When suppliers are paid using a virtual card platform, there’s no need for a business to run lengthy due diligence checks or set them up on internal finance systems – typically saving them 3-5 hours per transaction for a new supplier.

“Virtual card platforms can help to streamline a business’ payment system.” They can also be used to make payments directly into suppliers’ bank accounts meaning they can be paid using the platform even if they don’t accept card payments.

“That’s the through the card piece in procure-to-pay that we are addressing,” notes David. “Precisionpay, [Barclays virtual card platform] helps to streamline a business’ payment system and also allows payments to be automatically reconciled to invoices and purchase orders, creating further efficiencies.

Flexible controls

Authorisations and controls are fundamental to the procurement department, as it looks to avoid uncontrolled or rogue spend. The result can be over-engineered and over-complex control policies, with a bias towards the buyer rather than supplier benefit. Such an imbalance can make it challenging for procurement to negotiate the best deal.

“Objective advice to create sustainable long-term relationships.”

“Therefore, what we suggest is adjusting your policy so that your authorisation and control strategy is reflective not just of a desire to create control but is also proportionate to the supplier you’re working with. As procurement functions start to implement appropriate, supplier centric payment strategies, that’s when some of a virtual card platform’s capability becomes even more valuable.”

Moreover, by using a virtual card solution, companies can flex cash flow, much as a consumer equipped with a credit card could. Payments made today, for instance, can be repaid as per the billing cycle, plus an additional 28 days after the equivalent of a credit card statement has arrived.

Building a strategic partnership

It’s unlikely a virtual card platform would be the right payment vehicle for all suppliers. It’s important to figure out where best to deploy virtual card technology. By analysing a client’s account payable file and understanding their business strategy, it can provide recommendations for different categories of spend and which result in the greatest benefit for the buyers, such as where to quickly drive efficiencies through volume.

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Superfinance – The Merging Of Mind And Machine In Finance And Procurement

Are we facing a future where automation displaces the human mind and traditional procurement  and finance careers?

By Gorodenkoff / Shutterstock

Technology is used to consolidate and analyse all finance and procurement information. It also offers insights to the new generation of professionals in their decision-making process and tasks that require abstract thinking rather than computation.

The worlds of finance and procurement are about to change forever, and we are now at the turning point of this revolution. Often regarded as the most conservative echelon of the modern enterprise, today’s CFOs and CPOs are embracing new technologies, deploying automation, deep analytics and machine learning techniques to simplify financial and procurement operations and spend smarter.

As technology advances into the workplace, the traditional roles of finance personnel are changing as more processes are automated and data “crunching” takes the heavy lifting out of day-to-day routines. The change challenges professionals too, whose previous core competencies are now the primary remit of AI algorithms.

The concern for many is whether we are facing a future where automation displaces the human mind and therefore the traditional careers within finance. A major challenge for the modern CFO and CPO is to transform teams to take advantage of these new technologies. Employees in our industry are concerned that jobs are threatened, but the upcoming era of artificial intelligence will enable a new partnership between mind and machine that liberates humans’ natural skills through superior intuition and decision-making.

The concept of Superfinance looks to the visible horizon of the future and defines a modern finance and procurement function that is based on a Mind-Machine partnership. Here, technology is used to consolidate and analyse all finance and procurement information. It also offers insights to the new generation of professionals in their decision-making process and tasks that require abstract thinking rather than computation.

Humans remain valuable because of our ability to reason in a way that goes beyond executing calculations on available data. Many examples exist where this new combined man-machine hybrid has been more powerful than either human or computer alone.

What we can do that computers can’t is combine information from AI with the information coming from the real world, apply creative and critical thinking, make decisions and take care of customers.

Making better decisions

So, the combination of Mind and Machine holds considerable potential to expose, streamline and automate financial operations from their current state, from purchasing to payment, and offer new levels of competitive advantage.

Of course, digitisation of business processes isn’t anything new and has been around for some time now. It has already dramatically changed how businesses operate and professionals perform. Finance and procurement functions have already been permanently affected by this change. So, what does the future of mind and machine really look like and what should industry professionals do now to prepare for the evolution?

Digitisation of finance and procurement is evident within distinct phases:

At the heart of financial digital transformation is, of course, data. By consolidating procurement and finance information into the cloud, the power of machine learning can be deployed to create impactful results. This data provides the foundation for automation. Many businesses have already embarked on this journey of standardisation, simplifying and outsourcing financial processes for greater efficiency and cost savings.

The final step involves insights-driven Purchase-to-Pay: Here, the result of automation is aggregated data from the entire Source-to-Pay business process, which is changing the trajectory of finance and procurement.

We are now entering the phase of cloud-based big data, predictive analytics, artificial intelligence and machine learning. Professionals are already equipped with the timely, accurate and complete data they need to make better decisions and support business agility.

So, with the era of data-driven finance already here, does the increased amount of information really help us make better decisions?

Even with the advantage of data at our fingertips, our human condition can still get in the way when we approach decisions, and we may often look for confirmation instead of confidence.  Our gut feel is so real it can often override data-driven insights and enable us to make important decisions instinctively, and then retroactively fit information to support our conclusions.

Big promises

This behaviour hampers business results more than we are willing to admit. So, to make data-driven finance real, professionals have to become behaviourally aware and refrain from asking for the wrong answers from AI. AI can arrive at different results than we as humans would from the same data. Our role therefore is to try to connect the real-world phenomena into the results provided by the data, and make decisions that best benefit customers, as well as the business itself.

While the data era is making big promises about what the future may hold and what people and companies can do with the unlimited power of information at their fingertips, there are still many unknowns about what this will look like in practice.

But there are areas where finance and procurement professionals can focus to begin preparing for this future and developing our uniquely human talents. To achieve true Superfinance, finance teams need to upskill and develop in three specific new areas:

From a technology perspective it requires Automation through data, analytics, AI and machine learning. In terms of skills, behavioural awareness, data analysis and new job requirements are needed, before considering the final element of ‘Transformation’, which includes managing change, cultural shifts and talent development.

On a more granular level the following is a good roadmap for the transformation:

  • Improve data: Collecting and aggregating 100 per cent of financial data is always the first step to being ready for the future, as emerging technologies feed on that data. But presuming you’re doing that today, the next steps are cleansing and augmenting that data. This includes purchase orders, invoices, collaboration between suppliers and customers, and supplier information. All of this data can be improved by creating a team structure for data ownership, delegating maintenance to the data owners and augmenting the data sets with third party data for completely new insights.
  • Leverage cloud solutions: As businesses get a unified and accurate view of their data, they will be better equipped to answer new questions and challenge their colleagues with better reasoning. You can build confidence using cloud-based solutions so that procurement and finance professionals rely on their data and analysis of that data to make decisions and recommendations.
  • Become a business partner: Having data is one thing – using it effectively across the business is another. Data must be properly analysed for the right insights before collaboration across finance, procurement and business units to effectively deliver that information in a meaningful way – building and nurturing relationships across the business to hit strategic goals.
  • Make unbiased decisions: People often interpret information in a way that confirms their preconceptions today. It’s important to educate your teams to be aware of their biases and the right way to approach data analysis. This involves applying scrutiny and objective reasoning to the data-driven insights.
  • Manage talent: Moving from siloed execution to collaborative data-driven finance requires proper development and management of the right skills. You need to systematically manage talent, endorse an analytical mindset and improve financial processes and job descriptions to put data at the core.

Nimble and adaptable businesses that follow these steps will thrive, having rapidly sensed and responded to opportunities, and seized the advantage in the AI-enabled landscape.

Over the next decade, AI won’t replace people, but people who use AI will replace those who don’t. The future will transform us through organisational change, digital operations and better human capital management. Following these steps is a good start to building the foundation for a mind-machine partnership of the future, and hopefully making data feel inspiring as we celebrate the benefits of being human in an automated world.

This article, written by Louis Fernandes, VP & UK Country Manager, UK & Ireland – Basware was originally published here.