Opportunities for the banking industry to boost business

E-invoicing is an extremely useful service that has had a slower than expected uptake within the EU. For a large international economy like the EU, e-invoicing has huge potential benefits for the SME community. SMEs that are looking to extend their reach can utilise e-invoicing processes to conduct business in other countries safely and efficiently, without suffering an increase in administration costs.

The European Association of Corporate Treasurers (EACT) has been advocating the potential benefits of widespread e-invoicing for a while, leading directly to the European Commission adopting the 2010 VAT Invoicing Directive, specifically aimed to increase the uptake of e-invoicing across the EU. Following the implementation of this Directive in January last year there are now fewer obstacles to the use of electronic invoices, as individual member states can no longer impose conditions in relation to the use of electronic invoices. The requirement to use specific technologies such as electronic signatures and Electronic Data Interchange (EDI) as a means of securing the authenticity of origin and integrity of content is now an individual business consideration, with the only requirement being that each party must agree.

Small-BusinessDespite this encouragement, many SMEs do not have the capability to automate their invoice processing. More businesses can benefit from the advantages process automation brings in terms of increasing visibility and reducing cost and administrative burdens.

Banks are in a prime position to encourage the uptake of automated invoice processing, due to the sheer number of SMEs that currently use their corporate services. Their unique ability to link e-invoicing to companies’ current treasury and cash management services would provide a seamless extension to the financial services they already offer.

It does, however, make little sense for banks to replicate what already exists, which may cropped-cloud_shine_png.jpgbe the overriding reason many have, as yet, refrained from doing so. The best way for banks to incorporate these services would be through partnerships with companies like ReadSoft that provide Software as a Service (SaaS). Adding ReadSoft Online to corporate bank account offerings as a value added service requires no initial investment at all, as the SaaS method can be priced per invoice or by blocks of credits that can be used and distributed between customers as required by the bank.

Partnerships like this would not only foster the uptake of e-invoicing throughout the business landscape in the EU, but it would act as a key value added service in a corporate banking offering.

With no initial investment, ReadSoft Online provides a white label platform for banks so that they can provide an in-house accounts payable automation service that would automatically capture and interpret the information on supplier invoices and process them for payment in the most popular accounting software programmes used by SMEs, including Sage, Xero, IRIS, Netsuite and Microsoft Dynamics.

This gives banks’ corporate clients the ability to access this function from any internet FourQuadrant-Wall-Sales-Enablement-315x157enabled device, with automatic cloud back-up and no investment in hardware. Auditing and financial reporting would be significantly simplified giving clients further confidence in their banks’ services, increasing loyalty and solidifying relationships. If banks successfully incorporate platforms like ReadSoft Online into a SaaS model, they can build a complete e-invoicing solution, which would dramatically increase the adoption of e-invoicing by the UK SME market, saving time and money.

ReadSoft at Accountex

paper_contract_pngToday ReadSoft will be at Accountex, the UK’s only national exhibition and conference for accountants and finance directors working in practice, business and the public sector. You can find us at stand A42.

We will be talking to people in the accountancy industry about ReadSoft Online, our automated accounts payable software platform that can vastly improve the efficiency of any organisations that receive a large number of invoices. ReadSoft Online seamlessly integrates with all major accountancy packages and ERP systems and as a cloud based software as a service (SaaS) model, not only is data stored securely in specialist data centres within the EU, but it can be accessed anywhere from any connected device.

working-in-partnershipFor accountancy firms, ReadSoft Online can strengthen value propositions as the platform can be offered as a value added service to clients. Using the service will support clients with the time and financial cost of the auditing process, as all relevant information will be available instantly online. Clients will also benefit from the reduced cost of processing invoices, which can be up to 10 times cheaper than processing manually. The service can be customised for each specific organisation and is fully scalable, suitable for small businesses as well as large organisations with multiple sites.

With many issues currently facing accountancy firms, including the EU’s landmark shake up of auditor rotation reforms, offering ReadSoft Online as a value added service will help accountancy firms generate all important extra revenue from their SME clients through additional fee billing. The value added proposition will also help increase existing client retention and on boarding of new clients.

Making payments pay for small business

An interesting piece of research from independent payment provider Sage Pay suggests that the cost to small and medium sized business of handling cash is more than £3,600 per year.

The retail sector is notoriously competitive, so the news that cash comes at a significant cost, combined with another finding in the report, namely that 31% of consumers say that they are more likely to shop in outlets that offer a range of different payment options, provides real food for thought for small businesses.cost_management

Of course it is important to offset the “cost of cash” with the cost of alternative forms of payment (none of which are free). Credit card payments, for example, cost retailers a percentage of the fee in transaction costs, but reduce the risk of fraud, or the receipt of counterfeit bank notes.

Perhaps most interesting is the wide range of different methods there are now for payment. In addition to cash, there are credit and debit card options, with the potential for contactless payment or chip and PIN payment. Mobile apps enable a new range of options (including the recently launched Paym) and the Sage Pay report even references BitCoin as a potential alternative for retailers.

But the real lesson from this research is the importance of knowing the cost of each method of payment, both in capital expenditure and operational cost. Many smaller retailers decline to accept credit for sums less than £5 or £10 without adding a service charge – a sure sign that the proprietors know the real cost of doing so. However, I suspect that many of the participants in the research would have been shocked to discover the cost of handling cash is so high.

imagesRetailers do not just receive money – they have to pay it out as well. And it is equally important to know the cost of any transaction on money paid out as well as received. In research conducted by ReadSoft into local government accounts payable departments in 2012, we discovered that the average cost of processing an invoice was £3.40, yet for some of the respondents the cost was in excess of £10 per invoice and in one case it was three times this. Industry benchmarks for invoice processing suggest that 79p is an achievable goal, so even at a cost of £3.40 per invoice local authorities were wasting more than £2.50 per invoice. For an organisation processing 10,000 invoices per year this equates to more than £25,000 of inefficiency and unnecessary cost.

Whilst there is likely to be some discrepancy between the cost of processing an invoice in a local authority and in a small business, the important issue is knowing what the real cost of processing invoice is. For any business that receives more than 3-5,000 invoice per year and has a processing cost per invoice of more than £4.00, cloud based services like ReadSoft Online can transform the invoice payment process, saving significant staff time and money.

Small businesses would not tolerate accepting an invoice with a value £20 more than agreed, but in many cases this is exactly what they are doing by persisting with inefficient invoice processing systems. If SMEs need to be aware of the cost of handling cash, they also need to know the cost of paying suppliers and keep this to an absolute minimum.

Mortgage application changes will impact lending companies as well

From Saturday 26th April 2014, getting a mortgage in the UK became more difficult. This has been reported widely in the media, particularly the additional responsibilities that will fall on those applying for mortgages.

The background to the changes is simple. Previously banks decided on mortgage applications by focussing on income and making a decision on affordability based on this. New Financial Conduct Authority legislation will require lenders to also consider regular expenditure by borrowers.

legislationObviously the legislation makes sense in that it protects borrowers from being unable to afford repayments, but the onerous task of getting a mortgage will become harder for applicants.

Difficult though it is, also spare a thought for the banks. Processing mortgage applications will become a much more difficult task, with more information required from applicants, all of which will need to be sourced, archived and analysed effectively.

Many banks use Business Process Outsourcing to manage mortgage applications outsourcing1effectively, but in order to ensure the levels of service that customers have come to expect, banks will need to ensure that they are working at world class levels of automation. Why? Because the volume of data associated with every mortgage is about to increase dramatically.

More importantly, the sources of this information will be diverse. People may need to provide bank statements (which could be in electronic or paper form), evidence of Council Tax and other bills (including credit card payments), evidence of other regular outgoings, which may be evidenced electronically or again in paper form.

There is a classic case for mortgage lenders to implement multichannel process automation. This process receives all incoming data, including structured and semi-structured documents in all formats and from all locations. Powerful self-learning technology recognises relevant data to extract and improves continuously. This is particularly important as applicants are likely to have information coming from multiple sources. Documentation is captured and validated, with paper documents digitised, entered into a workflow system and incorporated into an application process seamlessly.

coin_netBy using the best document processing technologies (such as ReadSoft’s Process Automation), mortgage lenders can expect to reduce the time taken to make mortgage decisions by up to 80% as well as significantly reducing operating costs associated with sorting, distributing and indexing items. Data quality is also enhanced.

With banks now broadly unable to compete via price in the mortgage market (many mortgages are at similar or the same rates), customer service is likely to be the next key differentiator that mortgage providers look to. With the additional complexities of the new regulations, the most efficient mortgage lenders can win new business by ensuring process automation is at the heart of lending processes.

For more information on ReadSoft’s solution for large enterprises, please click here.

It’s not what you spend it’s how you spend it

Finextra recently reported that IT will be the top spending priority for the financial services industry in the UK during 2014. The site suggested that the investment would be driven by factors such as the increasing competition from peer-to-peer lending and crowd-funding – fundamentally digital platforms that have become popular as the credit crunch significantly reduced bank lending to business.

Banks however would be ill advised simply to copy the platforms that have sprung up in the digital era as alternatives and focus on using technology to enhance and support what they are fundamentally good at: providing and maintaining a relationship with their customers over a long period of time. piggy-bankMost banks now have secure client webpages for customers and many have apps that can reside on customers’ mobile phones. Access to information and transactions are therefore easily accessible. So where should this investment go?

In many cases banks could do well to focus their technology infrastructure spend less on front of house and more on back office functionality. Process automation has a number of key benefits for the banking sector, even beyond the obvious advantage of cost reduction. It provides a clear audit trail for compliance, a secure environment in which to store important documents and enables customer facing staff to have the latest information available at the click of a button.

Documentation can be captured in whatever form it arrives: email; fax or even by coin_nettraditional post, processed and digitised and integrated quickly into workflows. This reduces manual intervention and ensures that relevant information is available quickly and easily. For those attempting to open an account, take out a new product or service or conduct unusual transactions, process automation can help to significantly reduce the amount of time spent waiting – an important aspect of customer satisfaction.

ReadSoft has been successfully supporting the banking sector with the implementation of process automation to bring traditional banks into the digital age. For more information and to read about some examples, please click here.

Driving automation into the BPO

The modern BPO faces new challenges that the industry has not had to deal with to date.

Traditionally BPOs flourished by offering increased flexibility and reduced costs to bposervices-250x250businesses that wished to outsource their business processes. The trade-off for businesses was the risk of a compromise in security or privacy. BPOs could chase lower labour rates around the world to deliver outsourcing at a more and more efficient cost.

In India labour prices up by 17% since 2009 according to Business Insider, so those days are broadly gone. This is driven by a number of factors, not least the significant reduction in labour arbitrage across the world. As new centres for BPOs grew, wealth flourished, pushing labour prices up. Furthermore infrastructure and property prices have remained high despite the global recession. BPOs are no longer able to differentiate on cost alone. They need to find other benefits.

This environment is further complicated by increasing competition within the BPO market and customers demanding more value from their outsourced relationships.

So where does a BPO look to add value, reduce labour cost, differentiate and stave off competition? Automation provides a significant opportunity. BPOs are always dependent on Robot_Human handshakelabour costs until labour is replaced with automation. New developments in automation enable ‘self-learning’ processes to improve over time, delivering a further value add to customers. This is particularly relevant for BPO that are tasked with continuous improvement targets – not least when renewals are being discussed.

 

To find out more about how Readsoft can help BPOs achieve real ongoing savings and benefits to customers through optimisation, click here.