How to Get Smarter with Commercial Credit

As global macro-economic headwinds grow in strength, finance bosses are under increasing pressure to find ways to cut costs, increase margins, free cashflow and protect working capital on the balance sheet. Getting better at utilising commercial credit is key. Too often it is under-used in the organisation, especially in B2B payments, but new digital payments platforms offer a fresh approach.

Payment problems

Supplier payments have been left untouched by innovation for so long that most CFOs could be forgiven for passing over this part of the business when looking for new ways to run finance functions more efficiently. Yet there are huge opportunities here. Most large organisations have extensive networks of suppliers they pay vast sums to every month. Complex, inefficient and manual processes mean payments often go awry. Over half (53%) of FTSE 350 CFOs responding to an Optal report said they spend more than £20m per month on B2B payments. Unfortunately, 49% admitted their teams had misdirected or made duplicate payments.

Paying suppliers via commercial credit cards should be a no-brainer. They offer the benefit of simplifying the process, by consolidating multiple payment methods, as well as maximising working capital. They also preserve corporate reputation and ensure organisations maintain good relationships with their suppliers, by ensuring buyers aren’t forced to extend their payment terms.

Yet what happens when these suppliers don’t accept cards? It’s not uncommon, especially for B2B payments. The cost and admin overheads associated with signing up with acquirers can be too much for many businesses plus the double keying to produce valuable invoice data can lead to errors and reconciliation issues. This is true of organisations of all sizes, all the way up to HMRC.

The result for finance teams is they are being forced to manage multiple costly payment processes for different suppliers, many of them disrupted by human error. It also undermines efforts to manage the corporate accounts according to best practices, i.e. preserving working capital. What’s more, if finance departments aren’t fully utilising their commercial credit lines, they’re still paying for that latent capacity on corporate cards.

A new approach

Fortunately, new digital platforms offer innovative solutions to these problems. Invapay allows the buyer to pay all suppliers by card — even those that don’t accept. Invapay simply converts these funds to pay the supplier via EFT or faster payments. For the supplier, this means fast, friction-free payments with no need to invest in card acceptance, which will ensure a good working relationship is maintained with their partners.

On the buyer side, CFOs get to extend their Days Payable Outstanding (DPO) and maximise previously underutilised credit lines, enabling them to keep working capital on the balance sheet for as long as possible. Payments processes are streamlined and simplified, with reconciliation automated. Corporate customers pay a small fee classed as an “on-balance sheet liability”, to protect their working capital.

With eight in ten CFOs embracing digital technologies to help them achieve their goals, it makes sense to take a look at what Invapay can do for your business.

If you’d like some more practical advice on how to optimise your working capital, and how Invapay can help, download this eBook.

Contact details:

Bradley Eccleshare
Chief Marketing Officer

M +44 0 7525 929198
T +44 0 20 3892 4928

About Optal Ltd

Optal is re-inventing how payment processes work across complex industries. By stripping payment processes of their customary inefficiency, Optal helps companies boost profitability across a growing number of sectors around the world.

Optal issues Mastercard branded payment products, driving its focus on developing and bringing to market, game-changing payment solutions. Optal’s working capital solution, Invapay, turns underutilised credit lines into a dynamic resource to manage cashflow.

“Invapay” and “Invapay solution” means Invapay Payment Solutions Limited, a private limited company in England and Wales, authorised and regulated as an Authorised Payment Institution by the Financial Conduct Authority under the Payment Services Regulations 2017 which is a wholly-owned subsidiary of Optal Limited.

Talk to us to discover how Optal can add value to your organisation.

General Enquiries: +44 (0)2038 924 928
Invapay Technical Support: +44 (0)3308 387 490

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