How to unleash your working capital via smart supplier payments

Finance leaders are under pressure. Above them, CEOs are increasingly pessimistic about future prospects. When asked by PwC late last year, nearly 30% predicted a decline in global economic growth, up from just 5% in 2017. A general theme emerged of businesses “hunkering down” and looking for growth from the inside-out. How can CFOs translate this into action? By re-evaluating areas like B2B payments, for so long a seen as a cost of doing business, as a way to drive new value for the organisation.

Fortunately, innovative tools now exist to help finance bosses do exactly this. By investing in smarter payments systems, they can streamline inefficient legacy processes to optimise working capital.

Focus on B2B payments

Supplier payments are often overlooked by organisations, despite the huge sums outgoing every month. Everything from tax, commercial rent, and utilities to smaller one-off sums need to be paid on-time, creating challenges for finance teams looking to maximise funds on their balance sheets. For some organisations, there’s an even bigger burden: many are likely to have a large ecosystem of suppliers with many accounts payable invoices to pay. Failure to settle on time could impact the quality of service and lead to an increase in future contract negotiations, hitting the bottom line. A new government prompt payment initiative is also putting pressure on working capital.

Be in no doubt, these are big sums. Half of FTSE 350 organisations we spoke to claimed to have over 500 suppliers, with a third (32%) stating they had over 2,000. Some 38% said they spend between £20m and £249m each month with these companies.

Unfortunately, existing payment methods like cheques and bank transfers can be slow, prone to fraud and human error and create admin overheads for suppliers. When it comes to commercial credit cards, acceptance can sometimes be a challenge.

A new way to pay

Optimising working capital makes good financial sense. It’s a key indicator of the economic health of a company and a necessary pre-requisite for expansion plans. But how can finance leaders reconcile this requirement with the need to pay large sums to suppliers each month?

Fortunately, new payments technology offers a solution. By acting as payment service provider, fintech innovators can enable clients to pay all their suppliers by credit card, even those that don’t accept cards. The finance department simply pays the intermediary by card and the latter then pays the supplier by EFT.

Thus, organisations can extend days payable outstanding (DPO) and therefore preserve working capital whilst reducing days sales outstanding (DSO) for their suppliers. The result is a win-win all round, enhancing key supply chain relationships and negating the need for organisations to run multiple payment processes for different suppliers, at extra expense. For banking providers it’s a useful opportunity to differentiate and maximise utilisation of commercial credit cards.

Payment innovations need to work without disruption, cutting cost and complexity and benefitting the entire supply chain whilst driving assurance and control. Optal Invapay ticks all of these boxes and more. To find out more on how Invapay could transform B2B payments for your organisation, read our new eBook, Payments Alternatives, today.

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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