At the 2022 Payments Canada Summit, we heard a lot about something that’s been a focus at Interac for a couple of years now: Since the onset of the pandemic, behaviour patterns have changed, and the economy has experienced an accelerated shift to digital — one that’s here to stay.
The pace of change is quick in a world rocked by the COVID-19 pandemic, and everyone is under pressure to adapt and deliver results. From what I’ve heard, treasury and accounting teams are really feeling the shift.
For finance professionals at forward-looking companies of all sizes, the answer is digital transformation and payments modernization. This means using new technologies and new ideas to disrupt and enhance the strategic value of traditional finance operations. In short, it’s about modernizing back-office functions and turning them into a strategic asset.
Faster digital and mobile payments are at the heart of finance transformation. Most of us are used to making digital transactions seamlessly in our everyday lives. But that experience hasn’t always translated to the enterprise world, where organizations unfortunately still rely heavily on cumbersome and expensive paper-based processes.
As I recently discussed with some of my colleagues at the 2022 Payments Canada Summit, that’s finally changing. We’re hearing from the market that organizations are more focused on digitizing payments than they’ve ever been before. Canadian businesses of all sizes are embracing payments modernization and the benefits that it brings — from clearing process bottlenecks and improving working capital management to new opportunities to generate data that can inform strategic decision-making.
Here’s what I’ve been talking about with other leading finance professionals:
Finance professionals agree on the urgency of payments modernization
Nearly eight in 10 (79 per cent) financial-decision makers across Canada agree that payments modernization is needed to facilitate post-pandemic recovery plans, as revealed through an Interac commercial payments survey.
Why do they say now is the time for businesses to incorporate faster, data-rich digital payments?
In the most immediate practical terms, digitization of payment transactions is inevitable with the widespread shift to hybrid work. As more employees work across multiple locations, manual and in-person processes (such as payment by cheque) have become not only antiquated but increasingly unfeasible. There’s still a large number of cheques in circulation by volume and transaction value and it remains one of the most popular payment methods in Canada. The inefficiencies and costs associated with cheque usage are holding us back as an economy.
Beyond that, there are bigger-picture strategic reasons to embrace finance transformation through faster digital payments.
Digital and mobile payments clear bottlenecks and create efficiency
Four out of five (80 per cent) financial decision makers have told us that moving from traditional payment options to digital ones will be essential to economic growth. Around the same proportion (83 per cent) say new contactless, e-commerce, and mobile payment solutions are needed to fuel the post-pandemic digital transformation.
How does that work on the level of an individual business (of any size)? There’s a “halo effect” that comes from faster, more transparent digital payments. Digitizing payments can dramatically transform the finance function so that it’s more efficient — and more strategic.
First, there’s the efficiency benefit, which also relates to how digital payments improve cash flow and allow you to better manage your working capital. (We know cash flow is a major concern for small- and medium-sized businesses, and it’s been especially important since the pandemic.)
The reliance on traditional paper-based payments can result in your cash application process being a bottleneck on working capital. With automation and straight-through processing, the bottleneck is broken, and payments become an enabler. Moving beyond time-consuming manual processes that are associated with paper-based payment also means faster processing and servicing. That’s on the receivables side.
On the disbursement side, transparency is really lacking with the traditional forms of paper-based payments. Treasury and accounting teams really have no line of sight into the status of business payments, once they are sent. Digital payments create transparency through transactions that are secure, traceable and recorded resulting in enhanced operational efficiencies, thus creating additional capacity for other value-added activities.
How payments modernization powers strategic decision-making
One benefit of shifting to digital and mobile payments is the ability to make better strategic decisions. By digitizing payments, organizations can transform their finance function from a processing centre to a source of strategic insights.
How does this work? As manual payment tasks become automated, fewer person-hours are dedicated to invoicing and payments. Finance teams can then spend more time on higher value-add functions, including mining the insights from the data you collect through your now-digitized payments.
So, you not only improve operational efficiency once the finance function isn’t burdened by old-style manual processes, but you also get enhanced data capabilities as well. You can shift your focus to delivering wider-scale benefits to the rest of your organization.
Businesses can power digital transformation using off-the-shelf tools
We’ve learned that one of the barriers to digital transformation is the perception that it’s difficult.
In reality, there are off-the-shelf tools that are straightforward to implement, like Interac e-Transfer for Business. It’s the same Interac e-Transfer service that most Canadians are also familiar with, but it’s enhanced for the needs of businesses. It enables data-rich payments in real time to help streamline accounting processes and accelerate paperless office strategies. It also offers bulk payment options, which facilitate several payments at once. These are powerful tools to simplify processes and boost operational efficiency.
I’ve spent a lot of my career in cash management sales, where I was responsible for helping corporate and commercial clients optimize their working capital by focusing on faster payments and receivables. Encouraging the success of Canadian businesses — big and small — is very near and dear to my heart.
So, when I say there’s still a lot of work to do to bring the benefits of digital transformation to Canadian enterprise through payments modernization, I’m also confident we’ll get there soon. And at Interac we’re proud to be providing tools that can help.