Just Say “Yes”! How Finance Can Help the Enterprise Break New Ground

Today's better payment providers offer more than just easy forex: KYC, credit checks, tax implications, governance and more, from one solo dashboard.
18 May 2022

Source: Shutterstock

No department or division in the enterprise wants to develop the reputation for being the one that always throws a spanner in the works whenever strategic decision-makers consult over a new business direction or opportunity. But as every VP or department head knows, operational detail is often unavoidably complex. And while the CEO may feel that the company needs to expand into South America or open a new branch office, putting the necessary processes in place to enable the organization’s strategy can sometimes take longer than expected. Or cost more. Or come with acute risk or potentially put the company in breach of regulation x or y. And so on…

Finance professionals are, rightly, much more aware of the types of details, caveats and stipulations than most. After all, the buck (or Euro, Yen, Pound) literally stops with the CFO. So while it may seem strategically attractive to open a new market in, for instance, South East Asia, the intricacies of cross-border payments add up at scale. Additionally, there are tax implications, costs to forex transactions, problems around fraud and KYC, data compliance, and a dozen other devilish details to be worked through.

Payment processes are a subject unto themselves, especially when the enterprise is making perhaps hundreds of different transactions in dozens of currencies. Payment providers will often say that their platform offers payments (and deposits) in every possible currency, but international SWIFT processes are, ironically, anything but swift. And very few such providers have localised knowledge of every market’s fiscal setup

The danger for finance departments is that the conservatism (small ‘c’) that’s a valued asset around the boardroom table can, too easily, put the brakes on a company’s strategic momentum. In some instances, that can be a good thing, but there are ways that some of the financial time sinks and working-through-of-details can be circumvented.

The most obvious is leveraging local knowledge (for a new geography) or specialist consultation (for new products or niche offerings, for example). External contractors don’t come cheap, of course, and taking on new staff with specialist abilities is rarely quick or risk-free.

But digital commerce’s advantages have opened up the possibilities for companies looking to have a much more agile approach to international trade, especially concerning cross-border payments.

We’ve seen the rise of neo-banks in the last five years or so; institutions that offer services with high scalability and low cost compared to “traditional” international banks. Consumers, especially younger generations, are flocking to these digital-first, app-driven companies for the convenience, new and different services, ease of use and low cost at the point of service.

Businesses are a little less fortunate in many cases. Successful companies sometimes feel they are their bank’s cash cows when looking at their monthly charges, especially for foreign exchange payments. And while the canny CFO will have established local, on-the-ground presence abroad (especially for the geographies where trade is brisk), those arrangements are slow to establish. Putting up with”SWIFT” international payments and high forex charges seems to be the only option when looking at new markets.

Specialist payment providers, often born around the time of the first e-commerce websites, are stepping up to fill the role of neo-bank for the business sector. With mature technology and established local presence in many dozens of countries worldwide, some providers allow that agility of trade that companies acting on their own struggle to establish.

What’s interesting is that with a focus on commercial organisations’ international needs, the payment provider can also run KYC checks on sellers, for example. That’s invaluable in reducing risk at the outset of a new venture and helps lessen the burden of, in the future, having to chase foreign companies who start to act in ways that are damaging to a brand. Furthermore, while some payment platforms insist on KYC documentation being translated, it’s not a universal requirement.

Streamlining payment processes means more than ease of establishing new markets, of course. One dashboard or person at the end of the phone that can handle multiple geographies and tax jurisdictions means less time sifting through very different business processes every day, just to keep money moving around the globe. Value-adds from some platforms can include all-domestic money transfers from local banking presence, so SWIFT transfers can be avoided – for some sellers, that speed of money movements is a highly-desired feature.

Like neo-banks for consumers, payment platforms can step into the gaps in services left by traditional banking institutions. Is there a big-name bank that will, for instance, dynamically drive a KYC check on a seller for a marketplace, negotiating with local authorities on a marketplace’s behalf? Unlikely. But payment platforms with local presence can, and some do just that.

There’s no quick fix for every single one of the pain points of the finance division and establishing ties with payment providers takes time. You can’t, for instance, ask a marketplace seller to undergo a discovery process for KYC, only to have to re-ask because of a switch to another payment method or payment provision platform. But a payment platform can and should offer customers (and their customers) the chance to expand payment options, especially to include ones favoured by localised markets.

There are companies out there whose offerings have been developed not as an adjunct to existing services but as evolved technologies and methods purely for enterprises trading globally at scale. Digital-first disruptors like Upwork chose digital-first partners because their business is based on data. Companies like Airbnb and Shutterstock, who pay many thousands of suppliers all over the globe, won’t be hand-sorting through local tax laws themselves – the cost burden would be too high. Their secret was choosing the right payment provider early on.