Technology is transforming the supply chain in just about every aspect, but perhaps some of the biggest boons are coming from financial technology. The potential boons are huge, but some organizations are afraid of the perceived cost and complexity of these initiatives.
At EBN, we wanted to get down to the real story about fintech, and especially payment automation. We sat down with Karla Friede, CEO and co-founder of Nvoicepay, a payment automation software vendor, to talk about the current state of the financial technology (fintech) sector today and in the future.
EBN: What are the primary benefits of automating supplier payment processing?
Friede: Transforming the massive effort that goes into paying suppliers into a simple automated flow appeals to many chief financial officers (CFOs) especially when they understand we can immediately reduce their accounts payable costs by 75% and generate new revenue through a rebate. Our customers see a benefit of $4 to $5 per payment, so a customer making 100,000 payments a year will receive benefits of about $450,000 every year. The ROI along with the simplicity and efficiency of the process really speak for themselves.
EBN: What are some of the biggest fears/misconceptions that organizations have about technology adoption around finance?
Friede: [They are concerned that it will be ] a lot of information technology (IT) work, long implementations, etc. And it’s hard to find time for something you think is painful. When organizations understand how easy it is, they typically ask “Why doesn’t everybody do this?”
EBN: What advice to you have for organizations who want to improve supplier on-boarding?
Friede: First, look for a provider that wants to solve your problem and move all your payments to digital methods, not just credit card. Offering suppliers a choice of multiple integrated payment options delivers the best results for you and your suppliers. Second, find a provider that does not charge your suppliers to receive an Automated Clearing House (ACH) payment. We’ve seen this greatly lower supplier acceptance and result in too many paper checks. Last and most important, find a provider that will continuously on-board your suppliers, not one who wants to on-board just once a year or once a quarter – your results will be dramatically better.
EBN: Increasingly, we live in a global market. How is the financial technology (fintech) market evolving to address these needs of dealing with an international supply base?
Friede: Fintechs are addressing this need now, but it’s still is one of the biggest problems in business-to-business (B2B) payments, since many enterprises don’t know to look at a fintech and are still using their bank based solution which forces them to enter the international supplier payment information into a portal and go back and hand enter these payments into their enterprise resource planning (ERP). Customers tell us the 20% of their payments to international suppliers take up 80% of their time. Fintechs offer solutions that solve this problem by providing a solution enabling customers to initiate both domestic and international payments in the same simple workflow. Fintech solutions not only save an incredible amount of time but provide visibility, traceability and control over the payment – all things that have been sorely lacking for international payments.
EBN: Looking forward, what do you see as some of the next big evolutionary/revolutionary changes in the industry that OEMs can look forward to?
Friede: There is a big revolutionary change still in progress and that is the digital demand for connectivity placed on many consumer devices and OEM products across multiple sectors. I think this trend still has legs and will continue to impact even the most mundane items in the household. There are a couple of major ones on the horizon first AI has the potential to dramatically alter the computing landscape and compute resources in everything from hardware and the way software code is written to the networks that connect us. The second major change is the confluence of electric cars, solar power and self-driving technology, I think the combination will alter the automotive landscape quite dramatically as consumers stop purchasing traditional combustion vehicles and adopt ride sharing services that leverage self-driving electric vehicles powered by solar energy. I agree with Seth Miller that this will forever change the automotive industry and all the OEMs that participate In it — this change may be slightly further out than AI but will be every bit as impactful.