No doubt about it: the pandemic has spurred more and more businesses to digitally transform their operations, both customer-facing and back office. What does this mean for the finance function, particularly regarding accounts receivable and accounts payable? Craig O’Neill, CEO of Toronto-based fintech company Versapay, talks to StrategicCFO360 about the “next phase” of digital transformation, how it can help CFOs deal with inflation and opportunities for greater efficiencies.
What do you see as the biggest challenge in today’s market for financial departments? Biggest opportunity?
It’s no surprise that the pandemic fundamentally disrupted the B2B payments experience and facilitated a hastened adoption of digital channels for both buyers and suppliers alike. While businesses scrambled to adapt and find new ways of meeting their customers’ escalating expectations, the world evolved, and before our eyes rose a new global economy—one that prioritizes digitization and convenience everywhere, not just the financial department.
With this digital revolution taking the economy by storm, most corporate functions have significantly and dramatically changed, with accounting and finance departments being no exception. Having been provided the motivational jolt necessary to overhaul invoicing and payment practices that have long been mired in inefficiencies, businesses are now seeking to augment their current accounting operations with robust digital capabilities to drive efficiency, accelerate cash flow and meet customers’ changing expectations.
The true opportunity in all of this is in putting the customer at the center of the process. Digitalization with the customer top of mind, means creating a more seamless customer journey from ordering to invoicing, through to payment.
Customers’ expectations about doing business with their vendors has changed dramatically. To satisfy their demands, and ultimately provide better customer experiences, suppliers are kick-starting projects that are expected to deliver major improvements in efficiency while creating a collaborative and seamless experience for customers from the sales department through to the finance department.
What trends are you seeing, particularly around automation, in the CFO role? What can we expect in the next five to 10 years?
The reign of paper is definitely over, with the use of checks steadily declining over the past two decades. B2B customers want to pay digitally and even prefer doing business with companies that empower them to pay using their preferred methods. Therefore, if digitalization is the current trend, then I believe digital maturation and process integration across the organization and between companies will be the next phase.
As business customers grow accustomed to the payment experiences that they engage with in their daily lives as consumers, they are demanding—and expecting—similar flexibility in how they purchase from their suppliers. By automating in a way that best suits their business customers’ needs, CFOs can fundamentally change the way companies do business together over the next decade. We recently conducted a survey of CFOs in conjunction with Pymnts.com and found that nearly all—96 percent—said they were digitizing processes primarily for the benefit of customers and vendors.
Eliminating friction and old-fashioned finance department practices means CFOs will need to continue to double down on investing in digital infrastructures that give their teams the ability to accept digital payments as well as collaborate with other front office departments to better serve customers at every step of the relationship.
By empowering the AR department to accept and process more digital payments, businesses are improving the overall health of their businesses and cash flow. Beyond digitizing and automating, companies have the opportunity to transform their AR departments by connecting them to their customers, ultimately driving better results while improving customer experience.
As more CFOs are focusing on digitization, what role, if any, does digital transformation play in an organization’s broader financial strategy?
With a global pandemic as a catalyst, digital shifts are rapidly reshaping the finance department at many organizations with AP/AR modernization becoming a nearly universal pursuit for U.S. companies. In a business environment that faces financial and physical supply chain issues as well as rising inflation—where any sitting money can lose value, digitalization of the back office can make an incredible impact on an organization’s financial value.
As organizations seek to accelerate cash flow to maintain a healthy business, I believe we’ll continue to see digitalization as a broader organizational strategy. No longer are payments and AR viewed predominantly as behind the scenes activities that must be done after contracts are finalized. CFOs increasingly consider these functions—and their transformation to digital and collaborative experiences—to be crucial for building strong customer relationships and often cite this as their top reason for digitizing their operations.
Also important in the digital transformation of the back office is recognizing that many workers are and will continue to be hybrid or fully remote permanently. This trend lends itself well to the emergence of cloud-based operations, not to the continuation of traditional invoicing processes, meaning businesses must find long-term solutions to processes that once depended on staff being in office, like printing and mailing invoices. Any reluctance to digitize and divert from the pre-pandemic status quo does more than invite payment delays—it directly inhibits cash flow, impacting the entire financial state of an organization.