Finance professionals have a lot more than finance on their mind these days. Whether it’s worrying about cybersecurity, dealing with the legal aspects of global expansion, or anticipating what impact the political landscape might have on their business, finance teams wear a lot of hats. This is especially true for companies that do business internationally where both the financial and operational challenges get multiplied.
Flywire recently commissioned an independent research study of 300+ finance professionals working at mid-market organizations with an international footprint to understand their payment and receivable challenges. Industries included manufacturing, technology, consumer goods and professional services. The findings provide some insights into the challenges finance teams need to overcome related to both finance and business operations.
Finance professionals are just as worried about cybersecurity issues as they are with accounting ones. Of those interviewed, 91% reported cybersecurity threats as a top challenge including fraud (90%), being hacked (88%), and money laundering (85%).
Their concerns are warranted. The pandemic set off a huge increase in cybersecurity activity as remote work and the increased use of digital devices created new opportunities for bad actors. In addition, sophisticated new email phishing scams challenge AR and AP teams to discern valid requests for payments and refunds from fraudsters.
Requirements for Global Expansion
Opening new international markets presents big opportunities for businesses, but it does not come without challenges. In a recent study conducted by CFO.com, executives voiced several concerns, including dealing with multiple 3rd party stakeholders, managing legal/compliance concerns, dedicating resources to global operations, and recruiting talent.
Surprisingly, one of the hardest things for businesses to do when expanding internationally is getting paid. Slow, unpredictable payment processing times hurt cash flow and impede growth. A lack of automation and transparency creates manual errors in reconciliation increasing operational costs and hurting customer satisfaction. Hidden fees and unpredictable FX rates cost companies and their customers money. And country-specific regulatory restrictions and AML considerations add additional complexity and costs, especially when there are multiple parties involved in the transaction.
According to Flywire’s research, 9 of 10 finance professionals who have a role in handling inbound payments at their companies say global expansion efforts could accelerate if businesses could deal with foreign exchange (FX) rates more easily. 92% say they could increase global expansion if they had a better way to handle FX; 93% struggle with exchange rates; and 88% say the complexity of collecting cross-border payments impacts their ability to grow.
Global Affairs and Politics
There is no denying that politics can impact global business operations. A simple Tweet by a global political figure has the potential to send the global stock market into a freefall. Likewise, in periods of stability in international relations, bottom lines can benefit. When it comes to maintaining cash flow, today’s finance professionals keep just as much focus on global affairs as they do on the balance sheet.
80% of the finance professionals surveyed by Flywire believe the Biden administration will have a positive impact on their business, however some concerns remain including the potential for exchange rate volatility (87%), the impact of trade talks (86%), regulatory concerns (86%), international relations (85%), and open borders and the free flow of trade (83%).
Payment Process Efficiency
Finance professionals are increasingly asked to do more with less but the resources that they do have are often spent on the wrong things according to the Flywire survey. Specific areas mentioned include manual reconciliation of payments, shoring up the security of their systems, and dealing with payment compliance issues.
The lack of a streamlined payment processing system can mean significant lost time and revenue. 89% of the financial professionals surveyed reported losing money due to time spent dealing with Accounts Receivable issues. The amounts were significant: 55% reported losing 4-5% of revenue each month due to payment inefficiencies, and 23% lost 6-10%. Time was also a factor—54% reported wasting 6-10 hours per month managing inbound payments.
Finance professionals have a lot on their plate these days and those concerns span well beyond the P&L. Most would like to see a shift in their roles and responsibilities—from payments-related tasks to more strategic activities related to things like global expansion. However, they are being held back by legacy infrastructure and old-school payment methods that create a lot of unnecessary complexity and inefficiency.
If you are interested in more details on Flywire’s research, you can access the complete report here: Accelerating International Business Growth Through Simplified B2B Payments.