As we head into a second national lockdown, never has the efficient and effective management of finances been more critical for UK businesses.
But while accountants may be best placed to help support companies at this time, research has shown that the very payment processes and systems that are being used to deliver these business-critical payment services, may themselves be inherently inefficient; with both accountants and clients paying a high price and one that threatens to have an even greater effect on long-term liquidity, productivity and ultimately, profitability.
The research – Customer experience – the price of payments inefficiencies 2020 – found that payment processes are costing businesses a staggering £1.5m on average a year (or 12 percent of Opex) and these costs are spiralling. Two-thirds (64 percent) of businesses expect these costs to increase over the next two years and 62 percent of payment professionals now believe that the hidden costs of payment processes actually outweigh the hard costs, with the biggest hard and quantifiable cost being the impact of manual processes. The greatest hidden cost cited by those surveyed was the impact on customer experience and brand reputation.
With little automation and integration, most payments and payroll processes are labour-intensive and fragmented. The complexity of traditional payment flows and an outdated banking infrastructure with its reliance on manual process and file uploads, combine to make reconciliation difficult and greatly compromise an accountant’s ability to provide real-time data, just when their clients need it most.
What’s clear from the research is that payments innovation and the more efficient processes it brings is the key to creating new customer services and more efficient payment models for clients. However, many accountants are not yet maximising the opportunities of payments innovation.
James Milligan, director UK and Ireland, EMEA – technology at Hays who was one of many to offer commentary on the research, said: “There are multiple areas where we can drive efficiency – accounts payable, payroll, billing. All those areas can be quite onerous and labour intensive. And if you can automate processes in those areas, then you can look at delivering value, rather than just delivering the process itself.”
So, as we approach the close of the year and still with no end to the uncertainty in sight, there may be a temptation for accountants to delay upgrades to their core payment systems, but this is shown to be a risky strategy and one which could have an exponentially greater impact on business long term. With accountants needing to be more agile and responsive than ever before, there is now an added impetus to review existing software to see if it will allow them to better serve their clients by providing more timely and strategic advice, as well as quantifiable efficiency gains.
To read the study in full, as well as the commentary of business leaders, please visit Customer experience – the price of payments inefficiencies 2020.