Driving efficiencies in payment technology

Automated payment services are the best way for ambitious companies to save time and money, with savvy companies seeking out solutions that offer the technology, flexibility, infrastructure and regulatory compliance know-how to boost local and cross-border commerce.

What are the main payment management challenges?

For many businesses, establishing the best financial infrastructure for their needs is a combination of getting the basics right – such as saving time, not being penalised for exchange rate fluctuations and preventing  costly administrative errors – and having a deep understanding of the rules and regulations of the markets where they see potential for lucrative opportunities.

Gaurav Singh, growth strategist and founder of JPIN, a bilateral investment banking platform that links India and the UK, urges companies to start their international expansion journey armed with all the relevant financial expertise, either in-house or from external advisors.

“A UK company looking to expand overseas will need to consider enlisting the help of a payment provider that specialises in, and is popular, in the particular market of interest,” says Singh. “Companies must also be aware of the regulatory and tax implications of expanding overseas, as this can prove to be very costly if not understood correctly.”

Singh recommends an automated payment solution that offers a “clear and real-time overview of profit and loss that accounts for cross-currency transactions and changes in forex rates” to save time and prevent errors.

Kevin Blackburn, business development consultant and co-founder and director of Systemise Fulfilment, says that based on his experience, businesses that seek to operate in broader markets are “working towards simplifying operations” and they value “easy-to-use options” for functions such as managing payments.

When expanding overseas, payment management can quickly become more complex thanks to regulatory requirements that differ from those in the UK, as well as currency fluctuations and technical challenges.

“The banking industry differs from country to country, and firms need to have a good understanding of what each landscape looks like, first of all,” Singh says, especially from a technology perspective.

Seeking out markets in territories with financial systems where firms can connect via an application programming interface – better known as an API – will help streamline payment processes. Services and providers that specialise in helping firms in this area are becoming crucial for supporting enterprise-level companies with an international vision.

Brexit barriers or Brexit bonuses?

Since the UK voted to leave the EU in the 2016 referendum, there has been much concern and debate about the impact of Brexit on businesses keen to expand overseas. For many British businesses, a lack of preparedness for trading beyond the EU is holding them back on a macro level, before the finer details, such as cross-border payment management are even considered. To serve broader markets, it is crucial that enterprise companies ensure all operations are ready for growth.

However, EY’s 2021 research on international trade capability found that UK firms were significantly less likely to have a dedicated trade function (54%), compared with 68% in other markets. The report found that not onboarding the relevant expertise was already having “a significant impact on business confidence and skill sets in strategic trade areas.”

Blackburn says: “Brexit has created lots of confusion and difficulties; all the additional paperwork that is needed and legalities to consider have caused a lot of disruption.” However, he adds that for those businesses that commit to overseas expansion, opportunities have been created for “potentially rapid brand business expansion outside of the UK once a business is fully set up from a legal and operational perspective.”

Singh is optimistic about the possibilities for UK firms willing to “look far beyond Europe to the untapped potential in some of the world’s fastest-growing emerging markets,” especially in terms of sourcing investment.

“There is a wealth of deep-pocketed private investors, particularly in Asian countries, that can assist with the scale-up efforts of UK startups while providing them with the necessary expertise to expand into these countries,” Singh says, citing “high-profile negotiations” between the UK and countries such as India that are “piquing the interest” of UK startups that are now seeing the potential in foreign markets outside the EU.

Free trade as an EU member was certainly beneficial for UK firms keen to expand with minimal bureaucracy, but with the right advice and financial infrastructure solutions, such as an automated cross-border payment management system, forging new relationships in a post-Brexit world can be simplified.

UK-based ecommerce company Linnworks, for example, has formed a partnership with Payoneer to simplify international transactions with suppliers through integrated payment options and competitive currency conversions. The payment solutions offered by Payoneer reduce cross-border fees, striking the right balance between globalisation and getting paid locally.

Making the payment solution decision

The McKinsey Global Payments Map for 2021 found that international marketplace payouts account for up to $250bn annually – and this figure is projected to grow by up to 30% annually in the coming years. Against the backdrop of an increasingly digital economy, the businesses that are serious about expanding and competing globally will need to bridge the gap between what they need to thrive and what is offered by many existing payment solutions.

Blackburn summarises the main priority for businesses wanting simplified payment solutions when expanding overseas: “Time is incredibly valuable to everyone, so making something twice as fast, easier or simpler will be worth the investment for companies, even if this means moving entire operations from one platform that needs many integrations to one that is an all-in-one solution.”

Technology is making payment across borders easier, but Blackburn reminds businesses that the human element cannot be eliminated entirely from these processes. He urges businesses to prioritise establishing an internal finance department, “whether that is people making sure invoices are being paid [or] making sure that payments and expenses are being paid – it’s all very important – there are some things that you need a team to support you on and you can’t rely entirely on automation yet.”

By streamlining the internal processes, and implementing payment technologies, companies can save time and resources while mitigating risks in mass payments.

“Today’s businesses realise that success and resilience against the unexpected both necessitate a diverse global network of customers and vendors,” said Robert Clarkson, chief revenue officer at Payoneer. “This has created exponential demand for easy and secure payment solutions to support cross-border transactions.”

This strategy has become ever more crucial in the post-Brexit landscape where companies are seeking to grow their businesses beyond the UK’s borders.