Exhibiting at ABP Club’s Annual Convention last November was Optal, showing its alternative payment technology which is used in a range of markets to transfer funds more quickly and securely. Potentially, it offers bodyshops a faster and more efficient method of receiving payment from insurers. ABP spoke exclusively to Optal about how the process works.
Although new to the bodyshop industry, Optal has been servicing complex payment processes for companies around the world for over eight years. Fully regulated by the Financial Conduct Authority (FCA) Optal spotted early on that B2B transactions can be a major drain on resources, are heavily reliant on the legacy banking model and can even expose firms to a greater risk of fraud and data theft.
Last year, Optal processed just over 10 billion euros in payments, was recognised in the Financial Times as Europe’s seventh fastest growing company and named by the London Stock Exchange Group as one of the top companies to inspire Britain.
“We did a short survey at the ABP Annual Convention which gave us an opportunity to do a deep dive into how and when bodyshops are paid and we got some valuable feedback”
Katrina Beckwith, Head of Sales at Optal
The event was a fantastic opportunity for us to engage with the industry and explain the mechanism that we are proposing.
“From our survey at the event we found FEATURE that cheques are still highly prevalent in the industry although people prefer to be paid by electronic means,” added Katrina.
“Traditional bank payments also come with challenges. One of the biggest concerns voiced by repairers was that a lot of time was spent reconciling payments with the original claims – utilising valuable resource that could be doing something much more lucrative for the company.”
Optal has identified how to streamline these time-consuming, inefficient and costly processes by using Virtual Account Numbers (VANs) – a virtual card where there is an automatically generated 16-digit, single use number. The bodyshop pays a small fee for each payment transaction, but the benefits of using the system are many.
“When an insurer uses VANS to pay you, reconciliation is automatic and immediate, reducing the admin burden and minimising human error in the back office,” said Katrina.
“VANs ensure funds are transferred straight into your account so there is no more waiting for cheques to arrive or clear. The process is fast, simple and secure.”
Katrina observes that insurers have a particularly difficult time maintaining the bank details of a complex network of bodyshop suppliers.
“Predominantly with the approved network they will be paid through a bank, but the non-approved network is where we see the most headaches for insurers, and indeed from our straw poll we saw the most delay from the bodyshop repairer perspective,” said Katrina.
“Cheques are expensive for the insurer to process and time-consuming for the bodyshop. Even when they receive the cheque that money isn’t there until they bank it and the cheque has cleared. We’ve heard from a number of repairers that, thanks to bank branch closures, they are having to incur serious amounts of time and financial cost in banking their payment.”
Tracking payment references can also be problematic with legacy processes.
“When the bodyshop looks at its bank statement it says ‘Insurer A paid me £1,600’, but that statement doesn’t show the claims reference next to it,” said Katrina.
And if there is a lump sum of £20,000 relating to several jobs, the only way they can match these is through manual effort.
“With our digital card, payments can be made in a timely fashion as there is no needto wait for money to come through via a cheque or a bank transfer. Instead, the moment that a bodyshop receives our virtual card through email or some other mechanism, they are assured of that money. It’s a mechanism that they like because they’re getting paid quicker and they do not have to reconcile or chase the debt.”
She says that insurers also benefit because they don’t have to store sensitive bank account details, there is no fee for them to pay, and it minimises the manual effort and financial cost involved in making payments.
“We have been processing billions of euros worth of payments over the past eight years, predominantly in the world of travel,” said Katrina.
“Over the past 12 months Optal has been working diligently to promote its services to the insurance sector. That meant knocking on a lot of doors. Although at first the doors weren’t open because nobody knew they were looking for our service, I’m delighted to say that we are now going live with three UK insurers.”