Payment problems halting innovation according to Aussie CFOs

12-May-2017 12:00 AM

A new research report, Payment Revolution, has found that Australian Chief Financial Officers (CFOs) are struggling to keep up with payments, holding them back from investing in innovation and leading them to worry about their short-term survival.

With cash flow issues inhibiting the adoption of new payment technologies, and chronic payment processing issues in many organisations, 59% of companies said they are currently experiencing payment issues and at significant risk of failing in the next three years. Another 19% said they were at moderate risk of collapsing and they don’t have immediate plans to confront their issues.

The Payment Revolution research commissioned by American Express surveyed 355 Australian CFOs from businesses with annual revenues between $2 million and $300 million from 15 different industries. One third (30%) of these businesses said they were unable to reconcile supplier invoices at least every other month.

The survey found at-risk businesses were struggling to cope with archaic financial processes; approximately a third of surveyed businesses were still using an entirely manual approach to managing payments, with only 22% moving to completely automated solutions. These businesses were much more likely to suffer because of cash flow problems, and difficulty in accessing capital and customer retention.

Barry Fletcher, Vice President and General Manager, American Express International Payments JAPA at American Express Australia said it was critical that these struggling companies changed their approach to payments.

“We are approaching a financial event horizon for many mid-sized Australian businesses.  They can’t sustain this outdated approach to managing payments much longer,” Mr Fletcher said.

“The most alarming thing is that most of the issues businesses are facing are avoidable. Companies that push through changes to payment processes not only survive, they thrive.”

The Payment Revolution research found businesses that embraced emerging payment technologies were twice as likely to pay suppliers on time, three times better at managing cash flow and four times better at processing payment than other businesses.

These early adopters were also almost twice as successful at customer retention as those with poor payment practices and they expected to see a business revenue increase of 20% or more during the coming year.

Embracing future payment technologies

Other companies were expecting to follow suit, with 77% of senior financial executives saying a payment overhaul had a high or very high priority over other business objectives.

The research found that 89% companies had allocated funding this financial year for payments modernisation processes, with 39% having already invested between $50,000 and $100,000 to improve payments over the past three years.

Importantly many executives would turn to emerging technologies to help transform their business’ approach to payments during the next 12 months.

Some of the technologies that companies are looking to use include:

  • 20% of companies would soon use APIs to streamline payments
  • 18% would deploy smartphone mobile wallets
  • 16% would increase mobile transactions
  • 12% would trial Blockchain-style distributed ledger technology
  • 11% expected to incorporate Virtual Card Numbers to improve business transactions.

Overall 80% of companies expected to deploy at least one new technology during the coming year.

“Finance executives are eager to invest in innovation. Many of these technologies are still maturing, however early adopters are already seeing the benefits of modernising their approach to payments,” Mr Fletcher said.

To download a copy of the Payment Revolution whitepaper visit: www.chieffutureofficer.com.au.

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For more information or to organise an interview, please contact:

Simone McDermid from American Express on 0499 799 136 or simone.mcdermid@aexp.com

Notes to editors:

About the Payment Revolution Research

This research was commissioned by American Express and undertaken by RFi Group in October 2016 with Chief Financial Officers in mid-sized businesses in Australia with annual revenue values between $2 million and $300 million.   The findings contained in this Special Report reflect the views of 355 Chief Financial Officers (CFOs) in Australia. Respondents included organisations from more than 15 key industries, including construction, manufacturing, wholesale and retail trade, and professional services.

Additional Research Findings

  • The biggest technology priorities in the near future were improved cash flow management (41%); better business efficiencies (41%); frictionless payment experiences (40%); and, enhanced cross-border/FX payments (36%).
  • CFOs said the biggest barriers to deploying new payment technologies were concerns about security (48%), employee acceptance (42%), regulation (41%) and technology uncertainty (28%).
  • Some 32% of CFOs said being able to demonstrate positive ROI was critical to the acceptance of new payment technologies.
  • Payment Revolution found more than 61% of financial leaders ranked their willingness to drive innovation as high, with half also demonstrating a high willingness to take risks in pursuit of better business results.

About American Express

American Express is a global services company, providing customers with access to products, insights and experiences that enrich lives and build business success. Learn more at americanexpress.com and connect with us on facebook.com/americanexpress, instagram.com/americanexpress, linkedin.com/company/american-express, twitter.com/americanexpress, and youtube.com/americanexpress

Media contact

Simone McDermid
Manager Public Affairs and Communications

simone.mcdermid@aexp.com

Tel: +61 2 9152 2346

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