By Simon Shorthose, Managing Director, Readsoft UK
Building societies and small banks are reporting a rise in new customer applications and politicians are now calling for big banks to sell off branches in order to boost competition. The Big Four banks now hold 74% of all personal accounts, which after a sudden dip has remained a relatively stable market share since 2007. It is outside of these top 4 banks however, that more significant change can be seen, with some of the smaller banks steadily increasing their market share.
As the future of banking is set to change, the Big Four will rely even more on their corporate accounts. The challenge for the banks is how to add value to their offering and continue to evolve their corporate banking services. There is a continued risk of stagnation in this area, where each organisation offers the same products at the same or similar prices. Businesses constantly seeking to improve their efficiency look to corporate banking services for confidence in their financial management, legal compliance and audit trails.
E-invoicing is an extremely useful service that is missing from most corporate banking offerings. Manual invoice processing has a number of disadvantages, even for smaller businesses. It is a time consuming, slow and unclear system that lacks the ability to control and track each current invoice locally. Problems can occur when outstanding liabilities go unnoticed and there is always a risk of administrative errors. Still, e-invoicing has had a slow uptake in the UK SME market. E-invoices can come through specific portals in networks, but more often than not, they are received in many other formats. Receiving invoices via email, PDF and even Excel spreadsheets is very common and an overwhelming number of companies struggle through traditional processing in spite of the fact that well-proven process automation has been available for more than a decade.
The European Association of Corporate Treasurers (EACT) has been advocating the potential benefits of widespread e-invoicing for a while, leading directly to the European Commission adopting the 2010 VAT Invoicing Directive, specifically aimed to increase the uptake of e-invoicing across the EU. Following the implementation of this Directive in January last year there are now fewer obstacles to the use of electronic invoices, as individual member states can no longer impose conditions in relation to the use of electronic invoices. The requirement to use specific technologies such as electronic signatures and Electronic Data Interchange (EDI) as a means of securing the authenticity of origin and integrity of content is now an individual business consideration, with the only requirement being that each party must agree. Despite this, many SMEs and even some large organisations do not have the capability to automate invoice processing. In the modern internet business landscape efficiency is paramount as even small business can trade over great distances, international boarders and in real time. These changes should encourage the use of e-invoicing, so that more businesses can benefit from the advantages process automation brings in terms of increasing visibility and reducing cost and administrative burdens.
Banks are in a prime position to take the opportunity to facilitate implementing these innovations. As well as being able to aid the development, due to the sheer number of SMEs that currently use their corporate services, banks are also in a position generate considerable revenue from the process. Their unique ability to link e-invoicing to companies’ current treasury and cash management services would provide a seamless extension to the financial connections already established with clients. There may also be an underlying attraction for banks already offering factoring and invoice discounting services to further automate these processes for their clients. It does, however, make little sense for banks to replicate what already exists, which may be the overriding reason many have, as yet, refrained from doing so. Out of the Big Four, RBS is the only bank offering a real, bespoke in-house solution to both corporate clients and local government authorities.
The best way for banks to incorporate these services would be through partnerships with companies that provide Software as a Service (SaaS). Banks incorporating different software platforms as value added services within their offering could build a complete e-invoicing feature. Adding these services to corporate bank accounts using this method would require no initial investment at all, as the SaaS method can be priced per invoice or by blocks of credits that can be used and distributed between customers as required by the bank. Offering these services would not only foster the uptake of e-invoicing throughout the business landscape, but it would act as a key value added service in a corporate banking offering. This would be a solution to banks facing competition and struggling to add value to their corporate accounts. It then becomes less about the technology and more about using SaaS as a sales tool to attract and retain corporate accounts.
Services like ReadSoft Online would be an ideal solution for top banks that are looking for ease of use and compatibility with existing account features. ReadSoft Online is used by individual SMEs and also organisations that provide a facility to process invoices for payment on behalf of a group of customers. It would even be a solution for smaller banks that are looking to grow their corporate customer base. The software provides a shared service opportunity that could help banks increase the adoption of e-invoicing by UK SMEs. With no initial investment, ReadSoft Online would provide a white label platform for banks so that they can provide an in-house accounts payable automation service that would automatically capture and interpret the information on supplier invoices and process them for payment in the most popular accounting software programmes used by SMEs, including Sage, Xero, IRIS, Netsuite and Microsoft Dynamics.
This would give banks’ corporate clients the ability to access this function from any internet enabled device, with automatic cloud back-up and no investment in hardware. Auditing and financial reporting would be significantly simplified giving clients further confidence in their banks’ services, increasing loyalty and solidifying relationships. If banks could successfully incorporate platforms like ReadSoft Online into a SaaS model, they could build a complete e-invoicing solution, which would dramatically increase the adoption of e-invoicing by the UK SME market, saving everybody time and money.
Battling Covid collateral damage, Renault says 2021 will be volatile
By Gilles Guillaume
PARIS (Reuters) – Renault said on Friday it is still fighting the lingering effects of the COVID-19 pandemic, including a shortage of semiconductor chips, that could make for another rough year for the French carmaker.
Renault reported an 8 billion euro ($9.7 billion) loss for 2020 which, combined with gloomy take on the market, sent its shares down more than 5% in late morning trading.
“We are in the midst of a battle to try to manage a difficult year in terms of supply chains, of components,” Chief Executive Luca de Meo told reporters. “This is all the collateral damage of the Covid pandemic… we will have a fairly volatile year.”
De Meo, who took over last July, is looking at ways to boost profitability and sales at Renault while pushing ahead with cost cuts. There were early signs of improving momentum as margins inched up in the second half of 2020.
The group gave no financial guidance for this year, although it said it might reach a target of achieving 2 billion euros in costs cuts by 2023 ahead of time, possibly by December.
Executives said they were confident the carmaker could be profitable in the second half of 2021, but that they lacked sufficient market visibility to provide a forecast.
Renault struck a cautious note, saying it was focused on its recovery but warned orders had faltered in early 2021 as pandemic restrictions continued in some countries.
The group is facing new challenges as the European Union tightens emissions regulations and after rivals PSA and Fiat Chrysler joined forces to create Stellantis, the world’s fourth-biggest automaker.
The auto industry endured a tough 2020 but a swift rebound in premium car sales in China helped companies such as Volkswagen and Daimler to weather the storm.
Auto companies globally have since been hit by a shortage of semiconductors that has forced production cuts worldwide.
“The beginning of the year has shown some signs of weakness,” De Meo told analysts, but added the chip shortage should be resolved by the second half of 2021. “We have taken the necessary measures to anticipate and overcome challenges.”
Renault estimated the chip shortage could reduce its production by about 100,000 vehicles this year.
The group was already loss-making in 2019, but took a sharp hit in 2020 during lockdowns to fight the pandemic, which also hurt its Japanese partner Nissan.
Analysts polled by Refinitiv had expected a 7.4 billion euro loss for 2020. The group posted negative free cash flow for 2020.
The 2018 arrest of Carlos Ghosn, who formerly lead the alliance between Renault and Nissan, plunged the automakers into turmoil.
In a further sign that the companies have been working to repair the alliance, De Meo told journalists that Renault and Nissan will announce new joint products together in the coming weeks or months.
Renault has begun to raise prices on some car models, and group operating profit, which was negative for 2020 as a whole, improved in the last six months of the year, reaching 866 million euros or 3.5% of revenue.
Analysts at Jefferies said the operating performance was better than expected. Sales were still falling in the second half, but less sharply.
Renault is slashing jobs and trimming its range of cars, allowing it to slice spending in areas like research and development as it focuses on redressing its finances. It is also pivoting more towards electric cars as part of its revamp.
It was already struggling more than some rivals with sliding sales before the pandemic, after years of a vast expansion drive it is now trying to rein in, focusing on profitable markets.
De Meo told journalists on Friday that the French carmaker will make three new higher-margin models at its Palencia plant in Spain, where manufacturing costs are lower, between 2022 and 2024.
($1 = 0.8269 euros)
(Reporting by Gilles Guillaume and Sarah White in Paris, Nick Carey in London; Editing by Christopher Cushing, David Evans and Jan Harvey)
UK delays review of business rates tax until autumn
LONDON (Reuters) – Britain’s finance ministry said it would delay publication of its review of business rates – a tax paid by companies based on the value of the property they occupy – until the autumn when the economic outlook should be clearer.
Many companies are demanding reductions in their business rates to help them compete with online retailers.
“Due to the ongoing and wide-ranging impacts of the pandemic and economic uncertainty, the government said the review’s final report would be released later in the year when there is more clarity on the long-term state of the economy and the public finances,” the ministry said.
Finance minister Rishi Sunak has granted a temporary business rates exemption to companies in the retail, hospitality, and leisure sectors, costing over 10 billion pounds ($14 billion). Sunak is due to announce his next round of support measures for the economy on March 3.
($1 = 0.7152 pounds)
(Writing by William Schomberg, editing by David Milliken)
Discounter Pepco has all of Europe in its sights
By James Davey
LONDON (Reuters) – Pepco Group, which owns British discount retailer Poundland, has targeted 400 store openings across Europe in its 2020-21 financial year as it expands its PEPCO brand beyond central and eastern Europe, its boss said on Friday.
The group opened a net 327 new stores in its 2019-20 year, taking the total to 3,021 in 15 countries. The PEPCO brand entered western Europe for the first time with openings in Italy and it plans its first foray into Spain in April or May.
Chief Executive Andy Bond said its five stores in Italy have traded “super well” so far.
“That’s given us a lot of confidence that we can now start building PEPCO into western Europe and that expands our market opportunity from roughly 100 million people (in central and eastern Europe) to roughly 500 million people,” he told Reuters.
To further illustrate the brand’s potential he noted that the group has more than 1,000 PEPCO shops in Poland, which has a significantly smaller population and gross domestic product than Italy or Spain.
The company, which also owns the Dealz brand in Europe but does not trade online, has already opened more than 100 of the targeted 400 new stores this financial year.
Pepco Group is part of South African conglomerate Steinhoff, which is still battling the fallout of a 2017 accounting scandal.
Since 2019 Steinhoff and its creditors have been evaluating a range of strategic options for Pepco Group, including a potential public listing, private equity sale or trade sale.
That process was delayed by the pandemic, but Steinhoff said last month that it had resumed.
“The business will be up for sale at the right time. It’s a case of when, rather than if,” said Bond, a former boss of British supermarket chain Asda.
Pepco Group on Friday reported a 31% drop in full-year core earnings, citing temporary coronavirus-related store closures.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) were 229 million euros ($277 million) for the year to Sept. 30, against 331 million euros the previous year.
Sales rose 3% to 3.5 billion euros, reflecting new store openings.
($1 = 0.8279 euros)
(Reporting by James Davey; Editing by David Goodman)
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