Sharp Turn Ahead: Is your organization facing a payments inflection point?

by Erin McCune on April 23, 2013

in Change Management, Consulting, Erin McCune, Management, Payables, Receivables

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Glenbrook is kicking off a new payments organization optimization project for a biller client. Each time we do one of these projects, our client – with some embarrassment – admits that they think they are the only ones facing payments challenges. Nothing could be further from the truth! In fact, the smooth-running, optimized payments organization is the exception: even the most established, big-brand companies have payments challenges.

sharp turnAs businesses grow, they reach inflection points. The associated payment inflection point typically lags somewhat, but is inevitable. Many factors contribute toward a need to re-evaluate payment processes. Sometimes these work individually, but more typically multiple factors are in play at the same time – further complicating the landscape!

Here are a few real life examples of inflection points that cause organizations to re-evaluate their payments infrastructure:

Geography – As business expands in to new territories, payments needs change. We work with a number of eCommerce merchants who are startled to realize that credit card payments are insufficient when selling online to consumers overseas.  All of a sudden, they find themselves in need of global payment system providers and potentially having to establish a local presence to gain access to local payment schemes in different countries.

Complexity – Over time, the back office becomes more and more complex. It used to be adequate to have a wholesale or retail lockbox, managed by your bank, to receive check payments from customers. Today, many companies receive payments via a lockbox, online one time, online recurring, online via a partner, by phone, either via an automated IVR system or via customer support agents, and some even maintain offices and accept walk in payments. Each of these payment streams is likely to have its own flavor of exceptions, IT interfaces, reports, settlement windows, and vendor(s).

Business model – When companies acquire other companies they often find themselves with unfamiliar payments streams. I had a Fortune 20 client that sold only to other large enterprises. But when it acquired a company that sold to micro-businesses it found itself suddenly accepting credit card transactions (lots of them!) with no means to automatically apply them to open invoices in accounts receivable and no relevant expertise.  Another client happily discovered huge success selling to small businesses, but immediately found that its practice of accepting cash payment from this segment was not at all scalable.

Technology – Enterprises are adopting cloud solutions, and as a result back office solutions are gradually becoming more interoperable via APIs. As upstream business processes (whether CRM or merchandising or field service) being to move to tablets there is an opportunity to fix data discrepancies that lead to invoice inaccuracy much, much sooner. Technology opportunities such as these drive businesses to revisit the back office status quo.

Consumer behavior – The right now economy drives consumers to want real time data on their transactions, their account balance. These expectations are starting to blur into the commercial payment arena – as employees, we want our business tools to be as slick and intuitive as the apps we use on our smart phone in our personal lives. 

Economy – And finally, as the economy remains anemic, low income and budget conscious consumers are adapting by using more cash. In person payments and prepaid solution are gaining momentum. Billers in particular are facing this challenge.

Trigger Points

Reflecting on your own organization, and its payments environment, consider the following potential triggers that may lead to a payments inflection point:

  • New channel partners
  • Converging channels (online and offline merging)
  • Rapid growth and/or acquisitions
  • Deceleration/sunseting a line of business
  • Increasing cross-border sales or sourcing

There is no shame in realizing that your payments processes, tools, and perhaps even organizational structure aren’t working any more. You just need to recalibrate, and as you do so expect that you will inevitably have to do so again, because if there is anything we can count on, it is change.

Glenbrook’s Payments Organization Survey 2013
On a related note, we are currently conducting our third annual survey on payments organizations and invite you to participate. We are eager to learn how your company manages payments, and how your payments organization is evolving – whether you are a biller, eCommerce merchant, or retailer; whether you sell to consumers or businesses (or both). In this third iteration we’ll have an opportunity to track changes over time, noting how organizations adapt to increasing globalization and the blurring of online and offline commerce thus providing critical benchmarking insight to you and other participating companies.

Complete the survey here. All survey respondents will receive a copy of the forthcoming research report and my partner Jacqueline Chilton will be presenting the results via webinar over the summer.

Payments Organization Optimization
Glenbrook frequently works with companies to assess and improve payment processes, technology/vendors/reporting tools/talent and develop an actionable road map for improvement. Let us know if you are interested in help recalibrating your payments organization.

One Response to “Sharp Turn Ahead: Is your organization facing a payments inflection point?”

  1. Bob Skattum says:

    All great comments and dead on as to the necessity to continually review, recalibrate, and reset not only your processes, but perhaps the organization as well. I too have worked with clients where their systems, products, and payment channels offered were woefully inadequate when they expanded rapidly outside of their “comfort zone” or “tried and true” business model. Because payments is so interwoven into the thread of how we conduct business … the variations and permutations relative to different locales, different cohorts served, and different customer generations all result in multiple sets of expectations and only serve to add complexity. As you note, change is constant and I would add that it is what makes this industry that we all work in so exciting and unique.

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