Analytics Archives

October 21, 2023December 18, 2023 byJeet Vasa

How to achieve growth and strengthen resilience using automated AR and digital payment

Times are challenging for businesses of all shapes and sizes as we enter the second half of 2023. Market volatility and slowing growth are being driven by high inflation and interest rates, economic instability, and geopolitical pressures, on a micro and macroeconomic level.

By Marco Eeman, Managing Director, Europe, Billtrust

Only resilient companies will flourish, but the IMF warned of the increased risk of a ‘hard landing’ for the global economy just last week. It predicted a 25% chance that the annual global growth rate could fall below 2% this year – double its normal level.

For businesses to rise to these challenges, companies across all industries are taking a good look at their income and expenditure. Those that will ultimately succeed recognise that it is not simply cash flow that businesses should pay attention to, it’s how that cash is flowing.

Drive growth during uncertain times

A well-executed, automated accounts receivable process can positively impact a company’s cash flow, working capital efficiency, customer relationships, risk management, and financial decision-making. By optimising this process, a company can enhance its financial stability, profitability, and long-term success, even in an extremely challenging economic climate. Digital payment systems can also deliver a series of interesting advantages.

Increased efficiency and faster cash flow

Automated AR and digital payment systems streamline financial transactions by automating processes, reducing paperwork, and minimising manual errors. This efficiency leads to cost savings and allows businesses to allocate resources more effectively, contributing to improved profitability.

Timely and efficient invoicing and collections are crucial for maintaining a healthy cash flow, which has never been more important than it is now, as it allows companies to meet their financial obligations such as paying suppliers and employees. Digital payments enable companies to receive funds quickly, accelerating their cash flow. Compared to traditional payment methods like wire transfers, digital payments are processed in real-time or with minimal delay, ensuring faster availability of funds. A robust AR solution also automates collections tasks so any overdue invoices are sorted out faster, freeing up time that can be used in more value-adding spaces.

Expanded customer base and global reach

Streamlining the invoicing process can help foster positive client relationships and prove reputationally beneficial. An automated approach will simplify the invoicing process and minimise errors. Also, by accepting digital payments, companies can tap into a broader customer base. Many consumers prefer the convenience and security offered by digital payment methods such as credit cards, mobile wallets, and online banking. By accommodating these preferences, businesses can attract and retain more customers, leading to increased sales and profitability.

Automated AR solutions and digital payment systems facilitate international transactions and enable businesses to expand their operations across borders. Companies can easily accept payments from customers in different countries, opening up new markets and revenue streams. This global reach enhances business resilience by diversifying customer bases and reducing dependence on specific markets.

Data insights and cost reduction

Digital and automated payment and AR systems, and the added use of AI-powered tools, generate vast amounts of transactional data which enable companies to make data-driven, risk-adjusted decisions that reflect current circumstances and offer more control during a period of significant uncertainty. By leveraging analytics and data mining techniques, companies can gain valuable insights into customer behaviour, spending patterns, and preferences. These insights can inform strategic decisions, such as targeted marketing campaigns, personalised offers, and product/service enhancements. By leveraging data, businesses can optimise their operations, tailor their offerings, and boost profitability.

Automated AR not only allows companies to optimise their way of working, but it also allows companies to save paper, printing, and postage costs and eliminate expenses associated with physical checks, cash handling, and manual reconciliation. Moreover, digital payments can automate recurring billing processes, reducing administrative overhead and improving operational efficiency.

Choosing the right solution

Businesses must focus on compatibility when looking for a modern AR provider and make sure the solution is integrated with the open Business Payment Network (BPN) and interoperable with the larger payments ecosystem. It’s also important to work with an AR partner that has an in-depth understanding of evolving payments legislation. For example, EU laws are currently changing: in December the EU published the VAT in the Digital Age (ViDA) directive which will mandate e-invoices. It’s crucial businesses implement processes that are fully compliant with all relevant trading laws and choose tech solutions that help, not hinder this.

Conclusion

Digital payments offer numerous advantages that can contribute to building resilience and driving profits for companies. By embracing digital AR systems, businesses can improve efficiency, accelerate cash flow, access a larger customer base, expand globally, enhance security, gain valuable data insights, and reduce costs,

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October 21, 2023December 18, 2023 byJeet Vasa

Chargeback fraud is growing – can AI and Big Data stem the tide?

According to our research, 60% of all chargeback claims will be fraudulent in 2023. This means not just that merchants have to consider that chargebacks claims are more likely to be fraudulent than legitimate, but that individual merchants and the anti-fraud industry need to lay the groundwork to collect and analyze data that will show them what fraud looks like in real-time.

By Monica Eaton, Founder of Chargebacks911

While many industries are benefiting from so-called ‘big data’ – the automated collection and analysis of very large amounts of information – chargebacks face a problem. The information that is given to merchants concerning their chargeback claims tends to be very limited, being based on response codes from card schemes (‘Reason 30: Services Not Provided or Merchandise Not Received’), meaning that merchants would have to do a great deal of manual work to reconcile the information that the card schemes supply with the information that they have on hand.

While Visa’s Order Insight, Mastercard’s Consumer Clarity, and the use of chargeback alerts have reduced the number of chargebacks, merchants still have very little data on chargeback attempts. This article will look at how merchants can improve the level of data they receive on chargebacks and how they can use this data to create actionable insights on how to improve their handling of chargebacks.

What is big data?

2023’s big tech story is undoubtedly AI – specifically generative AI. Big data refers to the large and complex data sets that are generated by various sources, including social media, internet searches, sensors, and mobile devices. The data is typically so large and complex that it cannot be processed and analyzed using traditional data processing methods.

In recent years, big data has become a crucial tool for businesses and organizations looking to gain insights into customer behavior, improve decision-making, and enhance operational efficiency. To process and analyze big data, companies are increasingly turning to advanced technologies like artificial intelligence (AI) and machine learning.

One example of a company that is using big data to drive innovation is ChatGPT, a large language model trained by OpenAI. ChatGPT uses big data to learn and understand language patterns, enabling it to engage in natural language conversations with users. To train ChatGPT, OpenAI used a large and diverse data set of text, including books, websites, and social media posts. The data set included over 40 gigabytes of text, which was processed using advanced machine-learning algorithms to create a language model with over 175 billion parameters.

By using big data to train ChatGPT, OpenAI was able to create a language model that is more accurate and effective at understanding and generating responses than previous models. This has enabled ChatGPT to be used in a wide range of applications, including customer service chatbots, language translation services, and virtual assistants. Currently, technology very similar to ChatGPT is being used by Bing to replace traditional web searches, with mixed results, but, like self-driving cars, it is a matter of ‘when’, not ‘if’ this technology will become widespread.

AI and fraud

Chargeback fraud is a growing problem for businesses of all sizes. The National Retail Federation estimates that retailers lose $50 billion annually to fraud, with chargeback fraud making up a significant portion of that total. With the significant rise of online shopping, this type of fraud has become even more prevalent, as it is much easier for fraudsters to make purchases using stolen credit card information, forcing victims of fraud to then dispute the charges with their credit card issuer.

Chargeback fraud occurs when a customer disputes a valid charge made on their credit card, claiming that they did not make the purchase or that the merchandise they received was not as described. If the dispute is upheld, the merchant is forced to refund the money to the customer, along with any associated costs, and is typically charged a penalty fee by their payment processor. This not only results in a financial loss for the merchant but can also damage their reputation and lead to increased scrutiny from payment processors.

Where can machine-learning technology help with fraud? To understand this, we have to first understand its limitations. ChatGPT and Large Language Models (LLMs) like it are not Artificial General Intelligence (AGI) – the sci-fi trope of a thinking computer like HAL 9000. Although they can pass the Turing Test, they do so not by thinking about the given information and answering accordingly, but by matching what looks like an appropriate answer from existing text.

This means that while they can produce perfect text by copying existing text rather than ‘thinking’ about the substance of the question, they are prone to producing errors. This is something that isn’t acceptable when it comes to fields like fraud prevention – nonsense answers with a veneer of truth won’t work in the binary world of whether a particular transaction was fraudulent and unfounded accusations of fraud can damage a merchant’s reputation.

What is needed then are AI solutions built specifically for chargebacks. Companies like Chargebacks911 have been working on this for years now, and their solutions are based on big data models that have been built up over that time. Because of their extensive experience working in that field, they are the ideal partner to work with to bring AI up to speed and address the problem of chargebacks.

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October 21, 2023December 18, 2023 byJeet Vasa

The economic downturn will see greater innovation in FinTech: Three tips to thrive

It’s no secret that FinTech businesses have been fighting an uncertain economic environment over recent years. Landslide economic challenges have put every British business under extreme pressure, but our industry has shown its resilience. It’s the ability to adapt. To evolve. And ultimately, to continue to thrive despite uncertainty.

Hannah Fitzsimons, CEO, Cashflows

In fact, according to the latest CBS Insights report, FinTech companies are still thriving in the marketplace. And bigger businesses are taking note of the industry’s strength. Take Apple and its high-yield savings account for example. The company is actively seeking to increase and establish its fintech presence – and I wouldn’t be surprised if we see other Big Tech companies follow suit.

Why is FinTech maintaining its resilience?

People will always need to spend money, and with online payments being the second most common payment method in the UK, the opportunity for FinTechs is huge. Consider Buy Now Pay Later (BNPL); before the pandemic, BNPL was a term that many consumers likely hadn’t heard of, with a transaction value of just £34 million globally. In 2023, it’s predicted to reach a global transaction value of £300 million – a more than ten-fold increase – supporting consumers to access the products they love in a way that works for their financial situation.

Amongst wider economic challenges, fintechs need to continue this evolution. To consider the needs and wants of British consumers and design and deploy services that do not just meet but exceed expectations. In my experience, diamonds are made under pressure, and FinTech businesses need to harness this opportunity to not only survive but thrive.

Navigating the storm: Why strong leadership is essential

Strong leadership is essential to fostering innovation, especially in challenging economic times. Leaders must be able to navigate uncertainty, quickly identify emerging trends and be able to pivot strategies to stay ahead of the curve. To be able to execute this requires a strong, creative team. People are the most important part of a business, and as such, need to be supported through challenging times by business leaders.

To foster a culture of innovation where every employee feels valued, heard, and appreciated, FinTech leaders need to inspire their employees. They must be bought into the company’s innovation journey and feel passionate about its success.

The leaders who establish these relationships and build agility into the business from the top down can not only weather economic downturns but emerge from them stronger and more innovative than ever before.

The power of understanding consumers

In my opinion, innovation needs to make a real difference to the end user. Whether that’s giving a SMB rapid access to its business payments, or providing real-time spending behavior insights, the ultimate innovation measurement is the end impact.

However, before we can get to impact, businesses first need to identify the opportunity: understanding consumer behaviour and spending trends.

For example, at Cashflows, we’re always looking to innovate in line with our customers’ needs. To understand those needs, we surveyed small and medium businesses to understand their hesitations about switching payment providers. The research found that of the businesses that had switched merchant acquirers in the past, two in five experienced frustrations during the process. Companies cited challenges such as needing to submit significant amounts of documentation (61%) and having to share the same information multiple times (54%).

Using this insight, we created AI-powered fast onboarding to streamline merchant onboarding. Listening to customers influenced our decision-making and in turn, allowed us to create and invest in an innovation that would yield the greatest impact for not only our customers but our business.

From Insight to action: Creating and delivering a winning strategy

In business, you’ll hear how important a well-crafted strategy is almost every other day. Yet, many businesses are still yet to put a truly cohesive strategy in place. With the economic downturn changing customer behaviors and market conditions evolving rapidly, I think every business should have a comprehensive strategy to guide their product roadmap and effectively communicate a route through tough times.

When looking at innovation, particularly in an uncertain economic climate, a sound strategy will help FinTech day-to-day to adapt to changes and prioritize investments in initiatives that align with the company’s long-term goals and missions. In hard economic times, it’s easy to get lost in the day to day running of the business, fighting fires as they arise. However, by investing the time to develop a comprehensive strategy, FinTech businesses can boost productivity, stay ahead of the curve, and emerge stronger from economic downturns.

The key to success is the strategy execution. The strategy plays a crucial role in establishing the business’s direction; however, the execution of that strategy is what brings tangible changes throughout the company. This is where the workforce comes into play. To effectively implement a strategy, it is vital to engage employees and align them with the business’s vision and objectives. By fostering a culture of engagement between employees and the company, the organization will thrive, especially during challenging times.

Strong leaders, customer understanding, and a clear strategy. The points seem so simple yet foster huge opportunities for fintech businesses battling the economic downturn. We’ve already shown the amazing impact fintech innovations can have on supporting people and businesses through times of hardship. By taking stock and prioritizing strategic decision-making, the fintech industry will continue to thrive. I’m excited to see the next innovation that revolutionizes spending.

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