The Future of Commercial Payments: Managing Risk and Increasing Efficiency with Fintechs

As the global adoption of digital payments increases, commercial payments are no exception. With the rise of technological advancements, financial leaders must keep abreast of IT trends to remain competitive and focus their resources despite the economic instability. Interestingly, many CFOs do not consider the costs involved in making or receiving a payment, but instead, they consider the overall expense. In this article, we will discuss the future of commercial payments and how it involves mitigating costs, reducing fraud, and increasing efficiency through fintech partnerships.

Keeping abreast of IT trends to stay competitive

Technological advancements in financial services are opening new avenues for businesses’ growth, and CFOs must identify and target the key trends driving them. These developments include artificial intelligence, machine learning, blockchain technology, and many others. By pinpointing these factors, companies will be better equipped to focus their resources and invest in innovative solutions that will help them stay ahead of the competition.

The Importance of Considering Payment Costs

The cost of payments is a crucial factor to consider when it comes to commercial transactions. CFOs should not only look at the overall cost of a payment but also at the expenses involved in making or receiving it. In the B2B payments space, companies can mitigate costs by choosing payment methods that limit transaction fees and exchange rate charges.

Mitigating Costs with Payment Methods

In the commercial payments space, companies have several payment method options. Business leaders must understand which payment methods their suppliers accept and tailor their payments accordingly to save costs. By choosing payment methods with low transaction fees and favorable exchange rates, businesses can reduce the cost of making or receiving payments.

Benefits of Virtual Commercial Cards:

– Improved security and fraud protection
– Enhanced control and tracking of employee spending
– Streamlined payment processes and reduced paperwork
– Increased visibility into spending data for better budgeting and planning
– Access to rewards and rebates programs offered by card issuers

Virtual commercial cards are emerging as a win-win solution for buyers and suppliers in commercial payments. They improve cash flow for buyers by increasing days payable outstanding (DPO), which is the number of days it takes to pay a supplier, and they improve cash flow for suppliers by reducing days sales outstanding (DSO), which is the number of days it takes to receive payment. Additionally, virtual cards help with reconciliation by providing detailed payment information to both parties.

Managing Risk and Reducing Fraud

One of the top priorities for businesses in 2023 is managing risk, especially in reducing fraud. The pandemic has accelerated the adoption of digital operations to improve remote work capabilities. However, as companies migrate online, they also become vulnerable to cyberattacks, phishing, and other forms of cybercrime. This makes it necessary to have robust fraud prevention strategies in place.

Lowering Fraud Risk with Virtual Cards

Checks, wire transfers, and ACH debits are considered high-risk payment methods, whereas virtual cards have the lowest level of fraud. Their “straight-through” processing technology makes them inherently difficult to attack since there are no intermediaries to target. Moreover, virtual cards offer customizable controls to ensure that transactions follow stringent guidelines and prevent fraudulent purchases.

Partnering with Fintechs for Digital Operations

Companies that require a competitive edge can partner with fintechs to improve their digital operations. Fintechs, like Boost, specialize in creating cutting-edge solutions that help companies streamline their payment processes, improve cash flow, reduce costs, and manage risk effectively. Fintechs can also provide invaluable advice and innovative ideas that traditional financial institutions may not have considered.

The Advantages of Working with Fintechs

Fintechs are known for their agility and ability to develop solutions quickly that address specific pain points. Additionally, these companies can create custom payment solutions that are unique to a particular business to address their specific needs. Overall, they can do things that corporates don’t have the resources for and present new ideas and possibilities that financial institutions may not have considered.

In conclusion, the commercial payments space is rapidly evolving, and businesses must adapt to stay competitive. CFOs must focus on the cost of payments, rather than just the overall cost, and choose payment methods that mitigate expenses. Virtual commercial cards present a win-win solution for buyers and suppliers by improving cash flow and reducing payment processing time. Moreover, combating fraud will remain a top priority and virtual cards, with their “straight-through” processing technology, will play a significant role in reducing this risk. Finally, partnering with fintechs, such as Boost, can provide businesses with an advantage in terms of innovative payment solutions and staying at the forefront of the market. The world of B2B payments is changing, and it’s an exciting time for buyers, suppliers, and fintechs alike.

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