Finance chiefs in the insurance industry spent much of their time tackling a series of geopolitical, macroeconomic and day-to-day challenges, which exposed their businesses to growing cost pressures. The bad news is that, to a large extent, these challenges are likely continue into 2018. However, there is a way forward: by focusing on optimising B2B payments you could reveal and strip away hidden inefficiencies, reduce risk, drive revenue and maximise your margins.
So don’t think of payments as just another cost of doing business. The key to gaining a competitive edge this year lies with streamlining your business processes.
A challenging year ahead
Insurance CFOs are being kept awake at night by a confluence of factors including:
Rising staff costs: In some cases, staff costs are rising faster than revenues, compounded by the Brexit-linked rise in inflation resulting from the fall in the value of sterling. Near full employment and a continued shortfall in talent will only continue this year, with employers finding it even harder to attract the best candidates from across the EU.
Rising import costs: As above, the devalued pound continues to push up the cost of imports. The resulting rise in inflation could also threatens insurers in reducing demand and leading to cancellation of policies.
Supply chain pressures: The impact of rising wages, import costs and a continued slump in the UK economy this year is likely to force your suppliers to pass on these costs to your organisation.
Cyber risk: As insurers embrace digital technologies to become leaner, more agile and productive, they also expose themselves to an increased risk of data breaches and malware-related outages. As customer data becomes better protected, supplier account data will be an increasingly attractive target for cyber-fraudsters.
Pension challenges: Funding the cost of Defined Benefit (DB) pensions will continue to challenge insurance finance leaders as they struggle to ensure the organisation meets its obligations to policyholders. In 2016, a third of CFOs said their DB schemes were paying out more in pension payments than they receive in contributions; and this figure is set to rise further going forward.
Day-to-day headaches: While the big picture trends above may catch the eye, ongoing daily challenges persist. In line with efforts to become more agile, insures are increasingly challenging their CFOs to accelerate annual and quarterly reporting. Yet on average they still spend a whole month to close the quarter’s books, and even longer to close last year’s results, according to Ernst & Young. It all adds up to yet another persistent drain on financial and human resources.
Time to optimise payments
As we head into 2018, finance bosses clearly need to find new ways to improve margins, cut costs and drive revenue. Few consider B2B payments as an area which could generate such benefits, but the truth is that such systems are ripe for an overhaul.
Insurance CFOs currently have to manage:
- A sometimes complex and extensive ecosystem of suppliers that must all be paid on time
- Costly, insecure and inefficient manual processes heavily reliant on the legacy banking model
- Exposure to fraud, data theft, supplier default and erroneous bookings
The Optal approach
At Optal, we’ve made it out business to optimise complex payment processes for organisations all over the world. In fact, the first problem we solve is the one you might not know you even had. We believe that many of the pressures facing insurance firms in 2018 can be relieved by streamlining payments, allowing you to build loyalty with every bill you pay whilst closing claims faster.
With Optal you can:
- Drive new revenue streams by paying smarter
- Optimise working capital by identifying and activating underused credit
- Automate reconciliation for every payment, saving time and money
- Drastically reduce fraud by streamlining transactions
- Reduce data breach risks by removing the need to store payee bank details
Our preferred status with global card and banking partners not only allows us to minimise transaction costs but also turn cost centres into profit centres via rewards. So, take a look today and see how 2018 can be the year you finally make payments pay their way.