Drew Yergensen & Margarita Vacanti
Digital transformation continues to sweep the country — especially as more companies and their customers embrace digital payment technologies.
Here are four areas where your business can embrace the future of digital payments both with consumers and other businesses — and in doing so, take steps to improve your cash flow, profitability and efficiencies in operation: {mprestriction ids="1,3"}
Embrace Automation. Transitioning from paper-based, manual invoicing and payment processes to automated digital methods is an important component of embracing the future of digital payments. In 2020, COVID-19 forced many businesses to adopt new technology because a remote work environment simply did not support traditional manual processes. But beyond the pandemic, automation tools can help resolve multiple pain points in the processes of making payments to vendors and receiving them from customers. Automation can increase the efficiency and security of financial administration, as well as reduce errors, improve transparency and communication between departments and reduce the need for rework.
These benefits, especially when applied simultaneously to accounts payable, accounts receivable and to customer payments (digital merchant services), can all work together to help businesses save time and money. There are many options in the market to choose from; different platforms will be a good fit for different types of businesses.
Leverage APIs. As payments become increasingly digital in nature, the role of APIs (application programming interfaces) is growing rapidly. For many businesses, APIs represent the most effective, efficient way to connect to their bank, make payments, reconcile payables and receivables and more. While the term may seem technical, an API is simply a digital gateway for your systems to connect seamlessly with the financial systems used by your bank, customers and vendors. No matter how sophisticated your platforms are, the process as a whole could quickly become frustrating if your system can’t connect easily to others.
Reinforce Fraud Prevention Tools and Tactics. We’ve all seen the headlines about ransomware attacks and other forms of fraud and cybercrime. Don’t let that stop you from embracing digital transformation. However, every business should be proactive in making sure its systems are properly protected from fraud as much as possible. The more digital your payments systems, the more you need robust fraud protection systems in place to protect your data — and that of your customers and suppliers. In particular, synthetic identity fraud, wherein a perpetrator creates a fake identity to defraud a company or other organization, is a growing concern for U.S. businesses. Additionally, during COVID-19, fraudulent unemployment claims cost the U.S. government billions of dollars in improper benefit payments. As companies transition to digital payment platforms, it’s important to build in fraud protection measures and educate employees on security best practices.
Business Efficiencies with Fintech Solutions. Your business should consider working with fintech companies and your bank to help meet customers’ needs in the digital payments space. Sometimes it makes the most sense to build a particular solution in-house, and other times the best course of action has been to engage with fintech. Fintech relationships provide fresh and innovative ideas and offer unique, holistic solutions and nontraditional treasury services. Based on specific payment needs, pain points, processes and business strategies, there are specific potential fintech solutions that can be implemented in your company.
The digital payments space is evolving quickly, and each business’s needs and priorities are unique. One thing that’s true across the board: Embracing new opportunities — including automation, APIs, fraud prevention and fintech solutions — can help companies prepare for the future of digital payments and all the benefits digital transformation can bring.
Drew Yergensen is the market president and commercial banking leader with KeyBank in Utah. Margarita Vacanti is West Region payments leader with KeyBank.
This material is presented for informational purposes only and should not be construed as individual tax or financial advice. Please consult with legal, tax and/or financial advisors. KeyBank does not provide legal advice.{/mprestriction}
