The Quick Read
- Nearly half of Chief Financial Officers (CFOs) in the UK, France and Germany expect to spend more on digital innovation over the next 12 months. More than two-thirds expect to be more involved in digital transformation.
- 73% of finance leaders surveyed by American Express expect increased interest in virtual payments as part of that digital transformation. And 78% say this form of payment will be important for their organisation in the coming year.
- Virtual payments can improve cost control, boost efficiency and increase security at a time when CFOs are grappling with risks like economic downturn and cybercrime while also being asked to drive the strategy for business growth.
At a time when many businesses are facing economic uncertainty, finance leaders are being called on to simultaneously improve efficiency and cost control, while also contributing to strategic growth.
These trends are reflected in the American Express 2023 CFO Survey, which also found that 71% of financial leaders in the UK, France and Germany expect economic instability to continue for at least the next 12 months, and a staggering 90% want to improve risk management.
However, despite this, 47% cite financial growth as their key strategic priority for the year ahead, while only 19% see lowering costs as key. Digital transformation of the finance function and beyond is seen as key to addressing these and the many other challenges identified in the survey.
As CFOs seek ever-greater efficiencies, one tool that many have added or expect to add to their digital arsenal is virtual payments. These automated payment solutions settle transactions quicker and more securely. But they also have wider benefits for the finance function and the business as a whole, including:
- Freeing up finance teams to work on more value-add, strategic activities
- Developing better relationships with suppliers, customers and employees
- Protection against cybercrime and fraud
- Improving risk management and forecasting
Read on to learn more about the challenges CFOs are facing, how virtual payments can help address some of these and the role they are playing in the wider digital transformation of businesses.
The Deep Dive
Awareness among finance leaders of the need for digital transformation is nothing new: developments in everything from improvements in accounting software to complex data visualisation platforms have changed the way finance teams work, commonly stripping out basic admin tasks and aiming to make work simpler, more efficient, and more accurate.
Many rules-based tasks have been changed by automated or artificially intelligent technology, while other innovations have allowed workers in finance to make use of the masses of data in the function to broaden and enhance their usefulness to the business as a whole and elevate more of their role into strategic realms.
This is reflected in the American Express 2023 CFO Survey, with 61% of CFOs expecting to be more involved in strategy for the wider business in the coming year. Over 46% expect to spend more on digital innovation, while at the same time balancing this with managing the risks of cyber threats, of which 63% expect to be a major issue for their business in the coming year.
That’s why CFOs are showing interest in virtual payment technologies, since they offer a way to make payments fast, cheap, and safe. Advanced security measures can help head off risks such as cybercrime and fraud, while faster transactions bring rewards, such as increased efficiency and better supplier relationships. They can even contribute to cost reduction through lower transaction fees and negotiated discounts.
The changing payments landscape
Virtual payments are just one of the many technology-enabled solutions finance teams are adopting, sitting within a broader sub-trend called: ‘PayTech’.
PayTechs make up a quarter of FinTechs [1] and they have quickly muscled in on the traditional payments ecosystem. PayTechs, including those focusing on virtual payments, aim to disrupt the way payments have typically taken place by doing more than just facilitating the transfer of funds.
The key capabilities of virtual payments can include:
- Connecting parties in the payment system more directly, including internal parties such as project and accounts staff
- Making better use of more layers of data about parties in the payment chain, increasing opportunities for efficiencies to be discovered
- Improving the capacity for, and quality of, analysis and reporting by providing more accurate, timely, and deeper data
- Real-time visibility into cash flow to enable optimised working capital management
For example, American Express® vPayment assigns a single-use account number to a transaction, project, commodity or staff member and allows finance teams to set specific pre-authorisation amounts and date ranges for transactions. This speeds up the payment and reconciliation process while giving finance teams greater control over company spending.
How virtual payments can change a business
The CFOs we surveyed say that they’re investing in technology and expect to be more involved in digital transformation. They’re inundated and see innovation as a route out of increasing complexity. They are looking for digital solutions that offer value beyond their stated goal.
It is little wonder then that the majority of those surveyed say virtual payments will be important to their business in the coming year, as these platforms can bring benefits to the finance function and the wider business. These include:
- Reducing the number of in-office staff handling transactions and processing payment information. This frees them up to work on value-add, strategic activities
- Developing better relationships with other people in their payments chain, such as suppliers, customers, and employees, meaning they can cut costs and potentially grow working capital and improve cash flow
- Protecting their organisation from cyber attacks, fraud, and theft of valuable financial information
- Improving risk management and forecasting through better safety protocols, more timely reporting, and better data
Simply put, virtual payments meet several challenges for CFOs head-on. While payment systems only focus on one activity in the finance function, they can improve profitability, refocus in-house talent, protect the organisation from bad actors, and enhance both risk management and compliance.
For embattled CFOs, virtual payments can be a game-changer, maximising control and saving money and time. Less time on paperwork, more time for growth.
Read the full American Express 2023 CFO Survey.
[1] Source: EY, How the rise of PayTech is reshaping the payments landscape