Article | August 18, 2021
Treasury management or more generally Supply Chain Finance management is still a neglected topic at many SMEs.
While large international corporations make the investment into expensive treasury management solutions (often part of their ERP solution) and even setup their own In-House Banks, this is considerably more difficult for the mid-corp segment and even more so for the smaller segment of the SMEs. Often SMEs lack the funding, time and expertise to deploy those platforms and often those platforms lack the flexibility required by an SME.
Nonetheless in this globalized competitive market with fast moving cash, even SMEs are in need of an effective treasury management. Every SME has its own specific challenges, due to its specific payment cycles and cash reserves. Nonetheless most SMEs (estimated to about three-quarters) still do their treasury management via (complex) Excel sheets, requiring a lot of manual effort. This gap forms a big opportunity (in Europe SMEs account for more than half of all gross value added) for incumbent banks and Fintechs to offer easy and user-friendly tooling for this. In recent years, more and more Fintech players try indeed to provide an answer to this gap, often via SaaS platforms, which connect easily to the customer’s banks (via Open Banking APIs) and for which the setup cost is limited.
The gains for an SME in optimizing their treasury processes can be very substantial. A good treasury management can reduce costs in multiple ways:
Reduce working capital by reducing the time to collect money from customers, by reducing inventory and/or by paying suppliers only at the payment due dates.
Reduce unpaid invoices by a better follow-up and good debt collection techniques
Reduce penalties (such as administration costs or late-payment interests) due to late payments and indirectly also improve the relationship with suppliers.
Reduce effort (resource workload) for financial management, like the follow-up of payments of incoming and outgoing invoices, automated generation of payment instructions for incoming invoices…
Optimized cash management allowing to keep on your current account only the required cash amount to run your business, thus allowing to invest excess cash, but also to avoid requiring short-term debt when too much cash is invested (and blocked in medium- to long-term assets)
Reduce foreign currency costs and exposure risks by keeping the right reserves of foreign currencies, applying hedging (like swaps or options) techniques, correctly taking forex rate fluctuations into account in future cash flow predictions…
Reduce transaction commissions for bank transactions, by selecting the right banking products, but also by using the right banking partner(s) (especially for international foreign currency payments big price differences exist between different banking parties)
Reduce cost of fraud by improving control, transparency and accountability via a pro-active, automated monitoring of all cash flows, allowing to detect anomalies as soon as possible
This can be achieved in multiple ways:
Setup and optimize the processes and tooling with the help of specialized services companies (like e.g. the offering of BelPay)
Setup or acquire software solutions (often in the form of SaaS offerings, i.e. Treasury in a Box) for cash & liquidity management, like invoice generation and follow-up (including invoice and payment matching), debt collection, incoming invoice processing (including payment), cash pooling, cash forecasting/capital planning… These software tools allow a more pro-active treasury management and reduce manual effort by automating certain steps in these processes. Examples of such platforms are HighRadius, Gtreasury, CashForce, Kyriba, Nomentia, Monite, Pair Finance, AiVidens… But there are also more specialized tools, offering only a specific service, like debt collection (e.g. Virteo, recovr, Pair Finance, TrueAccord, CollectAI, CollectionHub, inDebted, Attunely…), digitalization (through OCR) of paper invoices (e.g. Tangentia, Contract.fit, Metamaze, Klippa, SimpleOCR…), expense management (e.g. Payhawk, Rydoo, Expensify, Spendesk, Pleo, Circula…), account aggregation and payment initiation (e.g. Isabel 6/Ponto)…
Capture revenue by allowing customers to pay for products or services in a way that is most efficient for them and for the SME, allowing to increase sales, but also to ensure the best possible payment ratio. This includes solutions like digital onboarding and management of Direct Debits (e.g. via Twikey or DigiTeal), including a Pay button (e.g. via Twikey or POM) in invoices which allows to pay the invoice with a pre-filled credit transfer, card payment or other payment option, integration with PSPs (like Adyen, Mollie, MultiSafePay, Ingenico, Stripe…) for online payments, digital invoicing allowing to combine invoicing and payment (e.g. PEPPOL platform or offering invoices with immediate payment option via UnifiedPost, ZoomIt or Doccle), "Buy Now, Pay Later" solutions (like Klarna or AfterPay) or new solutions like PSD2 Payment Initiation or the upcoming new scheme of SEPA Request to Pay (SRTP).
Improve integration between accountancy software (and/or accountant) and the cash management solutions and associated bank accounts. Solutions like Silverfin, TOCO, Yuki, OkiOki, Billit, Furoo, Clearfacts, Billtobox, sevDesk, Candis… can provide (a part of) a solution to this.
Usage of solutions for cash management (e.g. international cashpooling, sweep accounts…) and more general treasury management services offered by banks to their customers. These can be incumbent banks or new Fintechs, which specialize in the niche of serving SME customers. Examples are Tide, Qonto, Azlo, Arival, Fyrst…
Reducing costs of international payments and forex transactions via new Fintech offers, like XE.com, TransferWise, CurrencyTransfer.com, WorldFirst, iBanFirst, Ebury…, but also via specialized software tools, like Kantox, FiREapps, Money Mover, Acumatica…
Get cheaper financing via specialized credit institutions and banks (e.g. OakNorth, CapitalBox…), by issuing commercial paper (short-term paper) or long-term debt, via crowdfunding and peer-to-peer lending (e.g. Funding Circle, Auxmoney, LendingCrowd, Iwoca, Look&Fin, Crowdcube…), via Credit Lombard loans or inventory-based loans (e.g. Finventory) or via invoice factoring (e.g. Edebex, Previse, Optimum Finance, GapCap, BlueVine, BillFront, Crowdz…). There are also more and more marketplaces and comparators assisting SMEs to find the best financing option, e.g. Funding Options, BusinessComparison, Crowdz…
Improve risk management (like currency risk, interest-rate risk, market risk, credit risk, counterparty risk…) via trade finance, like bank guarantees (cfr. Ebury), via better authorization and fraud detection mechanisms (detecting patterns and anomalies) or by better assessing counterparty risk (e.g. DueDil, InsideView, PitchBook…)
Apply tax optimizations, by optimizing for different tax regimes worldwide and also optimizing for tax deductions (like e.g. generate revenue on entities which have collected losses in the past)
Clearly the Fintech market for SMEs is in full evolution, but still quite immature. As a result dozens of offers exist, making it very difficult for SMEs (which was one of the reasons in the first place they work with Excel) to select the best and right offering(s) for their company. As such there is a big market for consultancy and other services firms, specialized in helping SMEs to improve their treasury management processes.
Article | August 29, 2021
Although the concept of remote working is not exactly new, it is becoming increasingly more widespread as companies are responding to the COVID pandemic and the digitization of workspace.
A year ago, businesses were struggling with the question of whether virtual employees can both receive and give the same benefits that were driving success – but as many of them are now making that decision for themselves, the answer seems to be a positive one. Few organizations feel prepared to implement virtual work on a large scale, but there are steps you can take to make the experience more productive both for your employees and your business.
Preparing for this scenario, or optimizing its effectiveness, should focus on rethinking the necessary operational procedures to ensure business continuity. With a few considerations for your new virtual workspace, your employees will be just as engaged and excited to work for your business.
The unexpected transitions that have impacted both our lives and our work have disrupted our “normal” routines. Employees need to adjust to the new way of working just as much as businesses, so it’s vital to provide the support they need. Modern businesses are becoming increasingly aware that their employees juggle more than one challenge in their lives, both at and outside of work.
To ensure that you are supporting them in any matter, you should look at employee assistance program (EAP) providers that specialize in both personal and work-related problems. And, although this should be on the top of your priority list at any time, looking for certain ways to cherish your employees might be especially useful during new and challenging periods.
Making your employees feel like they are contributing and working as part of the team even though they are not physically present can help you maintain and boost success.
Focus On The Output, Not The Process
In a remote landscape, where many people are balancing their work with family commitments around the house, giving your employees the freedom to complete their work in the easiest way for them will keep your productivity numbers high.
So, organizations that have solid employee recognition strategies in place and implement employee recognition ideas to create an emotional connection with their workforce during these difficult times, tend to enjoy stronger employee engagement, enhanced employee morale, and lower turnover.
Since you essentially won’t be able to see your employees during the workday, virtual work inherently demands that you trust your employees. If you shift your attention away from the process and towards the outcome, you will likely find that flexibility will translate to more success. Essentially, if you trust your employees, they will show you their appreciation by supporting your goals.
Remote work is vastly different from the office life most people are used to, which is why finding an optimal work process will likely take some time. The best thing you can probably do in such a situation is to suspend your previous conceptions of the workflow and focus on providing a supportive structure. Once the scales balance, you will likely find your success formula.
Communicate Well And Often
There is no question that virtual work usually comes with a dose of loneliness. While this may not be true for all of your employees, you should make sure to adopt practices that open the doors for communication, especially for important topics.
Your virtual employees can’t enjoy a mid-day cup of coffee in the break room or after-work get-togethers with their coworkers. So, the culture and atmosphere of the organization will largely depend on what you communicate to them.
Communicating clear goals and expectations will help you reinforce your organization’s culture and ensure everyone is on the same page. And, while it’s not always necessary to overwhelm your employees with regular check-ups and meetings, you should check in every once in a while and encourage them to reach out if they want to discuss any challenge or topic.
Your company culture is a huge determinant of success, and in times when your company is only virtually connected, good communication is vital.
Article | March 24, 2020
In the realm of Hollywood films, if you build it they will come. In the real world, they often won't. The high failure rate of small businesses is well-chronicled. However, there are ways to mitigate risks and maximize your chance at entrepreneurial success. Here are a few tips for ensuring your venture doesn't become a fatal statistic in a hypercompetitive and dynamic marketplace, per interview with Inc.com.
Article | March 18, 2020
When it comes to digital marketing for businesses, as the saying goes: content is king. Content marketing, that is. That's why a whopping 70% of marketers are currently investing in content strategies, and 72% cite having a good content strategy as a major key to their success. For small businesses, content marketing is arguably even more vital. That's because smaller companies often don't have the marketing resources that larger firms do, and content marketing delivers some of the highest overall ROI for every marketing dollar spent. It's also a long-term strategy that can continue to pay dividends for a long time after it's put into effect.