Published : 7 months ago, on 01/03/2024

3 Ways Banks Can Better Meet the Needs of Today’s CFO

By Brandon Spear, CEO, TreviPay

Advances in technology and ongoing economic change are driving both opportunity and change in the traditional CFO role. In 2024, the perspective of the Office of the CFO is evolving to meet changing business needs to become more forward-looking and to influence additional business functions. As organizations look to develop more dynamic finance capabilities, CFOs are touching more business data to forecast risk and business challenges. Collaboration and data-driven decision-making across C-suite leaders are increasingly important.

Despite ongoing changes, one aspect of an enterprise CFO’s role remains consistent: a need to evaluate and access new credit opportunities. Despite the availability of lending options, many companies find this process challenging, competitive and labor intense.

A recent S&P Global Ratings report highlighted corporate debt defaults were up 80% in 2023 – a burden which could be exacerbated by “slower economic growth and higher financing costs.” So, while many corporations need a financial infusion to alleviate the cash flow squeeze, their existing debt load makes it unattractive to take on new loans. On the other hand, banks will continue lending money as part of their business model. This mismatch gives banks the opportunity to help businesses bridge the gap between their customer financing needs and current financial situation.

From my experience working with large businesses worldwide, banks can look to expand their lending-based services to business customers to drive new lending volume and create new customer value. This can build a new revenue stream for banks by offering value-added invoicing and payment services to their enterprise clients. Here are three reasons why this would be an indispensable financial service for bank customers.

1. Payments choice and convenience drive loyalty.

Offering the right payments and invoicing options are critical to building loyalty. To support the data-driven needs of CFOs, banks can help forecast what businesses need. This can be done by first considering what those businesses’ customers need. Like B2C transactions, B2B buyers also expect convenience when making a purchase. Banks can help better serve their enterprise business customers by facilitating these loyalty-building payment experiences, which will reduce the likelihood of buyers switching to a competitor.

Flexibility with payment options is so important that a recent TreviPay study uncovered 78% of global business buyers believe it is necessary for merchants to offer invoicing, and 51% would switch to a different merchant if it offers flexible net terms (30-, 60-, 90-days to pay). We also know that buyers who have better purchasing experiences tend to place bigger orders and will buy more over time.

2. Non-payment risk can be alleviated.

Businesses seek reliability in an uncertain market, but extending trade credit can be challenging for enterprises to manage in-house because it requires a strong balance sheet, customer credit evaluation, risk management and invoicing capabilities, which not all companies are equipped to do.

Outsourcing this function to a bank could alleviate the financial strain and increase cash flow, giving overworked staff more time to focus on strategic activities and make working capital available for other value-driving activities. How would this work? Well, the bank’s customers can automate their accounts receivable processes by leveraging off-balance sheet working capital and offloading the collections risk to the bank. The bank can then allow its commercial banking customers to take advantage of improved DSO with guaranteed settlement schedules.

3. Companies can benefit from new efficiencies with automated accounts receivables.

Bank customers are also increasingly looking for technology that combines purchasing, invoicing and net terms management. This aligns with IDC studies showing 67% of organizations are prioritizing investments in automation.

Incorporating a flexible API strategy can help make automation happen and is important to building core B2B functionality that can adapt with changing or growing customer needs. For example, the recently launched Financial Partner Gateway is a new suite of APIs that enables banks to deploy their capital to business buyers while delivering an omni-channel purchasing and reconciliation experience.

Overall, the growth opportunity is high for financial institutions around the world. Today’s buyers have elevated expectations that they will be offered what they want and need to complete their purchase easily. Banks can make this possible for their corporate clients by offering managed receivables, global invoicing and enabling enterprise businesses to give their buyers the ability to pay on terms. With the added capabilities, companies can protect cash flow with alleviated non-payment risk and drive loyalty. This also makes a banking partner relationship attractive to an enterprise CFO, who is looking to be digitally resilient and data-driven in all aspects of their operational strategy.

 

About Author:

Brandon Spear leads TreviPay with expertise in managing large, diverse global teams. His strength is discerning and focusing on the most important challenges facing an organization at a particular point in time and unifying all stakeholders behind accomplishing a set of specific goals. Brandon has a unique ability to connect across all levels of an organization, motivate staff with diverse skill sets, while ensuring a common alignment and results.