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STEPS FOR DE-RISKING INVOICING PROCESSES

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Invoice

Charles Henri Royon, VP EMEA at Tradeshift

In the news this month we’ve heard that a boss is facing jail for submitting more than £3 million worth of doctored client invoices, while a hotel manager has been convicted for falsifying documents worth £350,000 . While you may question how such an extortionate amount of money was swindled, this type of activity is actually more common than many might think.

The Institute of Directors actually found that nearly three quarters of UK businesses have received bogus invoices. Fraudsters are continually targeting companies, tricking them into sending payments to fake suppliers, and stories around rogue employees syphoning money into separate accounts often appear in the news too. We’re also seeing stories in the news about overseas scams pocketing cash through payments that don’t clear.

Most businesses will, of course, have firewalls and password practices in place to secure their organisation’s data. So why aren’t they taking similar precautions for their invoices?

It’s not necessarily easy; flagging fraudulent activity can be difficult, no matter the size and complexity of a business’ supply chain, whether SME or multi-national. Much like how AirBnB verifies its users against an identification checklist, or PayPal safeguards sellers with good records by holding buyers’ payments for 21 days, businesses too need better controls, checks and visibility into their supply chain, suppliers and payments.

Presuming that businesses would have taken the necessary precautions to assess whether their suppliers are legitimate (checking they’re registered, verifying endorsements and scrutinising the website, for example), there are a few steps they then need to de-risk the invoicing process even further.

The first step is to educate employees on the different types of invoicing scams and the specific payment patterns to look at out for that may indicate fraud. Key fraud flags can include round pound value invoices, duplicate invoice payments, paying straight away and failing to match invoices. They then need to create policies on how to act when such issues arise, such as reporting suspicious activity to their bank in order to block transfers.

Making supply chains more transparent is also essential and in an era of cloud platforms, this can be achieved by digitising processes. Electronic invoices flag errors and omissions so that invoices with inaccuracies are not processed, which is where paper documents can fail.

Hosting payments on a cloud platform also means businesses have access to real-time supplier master data which allows them to de-risk the supply chain even further. They’re able to look for and flag unusual activity (like those I already touched upon) much easier because they don’t have to dig through mounds of paper – it’s all accessible online.

By connecting with suppliers over the cloud, businesses can also build a supplier check list for them to effectively validate themselves – somewhat mimicking a LinkedIn profile. If suppliers don’t tick off certain criteria, then companies know to avoid doing business with them.

Having a one stop shop for supplier data also makes it much easier for businesses to regularly review their supplier list and make sure information is up to date. This way they can minimise duplicate suppliers and consolidate them when possible – avoiding payment errors – and also block those that have been inactive for say 18 months, which could signify a fraudulent company.

While we can never fully predict payment risks, we can certainly do more to prepare and avoid them. Educating employees, instilling processes and harnessing technology are all key steps for protecting a business – not only its purse strings but its reputation too.

Finance

KBC Bank chooses Finastra for LIBOR transition

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KBC Bank chooses Finastra for LIBOR transition 1

Fusion Loan IQ Alternative Reference Rate module and Fusion LIBOR Transition Calculator will help the bank move away from LIBOR

KBC Bank, a Belgium-based bank with operations across Europe, US and Asia Pacific, has chosen Finastra to help manage its transition through the upcoming interbank references rates changes. It has selected Fusion Loan IQ Alternate Reference Rates (ARR) module to manage new rates and to expand its lending business. The bank has also opted for the Fusion LIBOR Transition Calculator to help calculate rates ahead of the transition period.

Melinda Christens, Business Program Manager LIBOR Transition at KBC Bank said, “We’ve been using Fusion Loan IQ for a number of years, and have been impressed with the way the solution is able to continuously adapt over time, adding new functionalities in line with changing regulations. The transition away from LIBOR is daunting for most banks, but with the help of Finastra’s solutions we’re able to continue to calculate rates and embark on a smooth transition.”

Fusion Loan IQ is Finastra’s solution for commercial lending, powering 71% of all syndicated loans around the world. It alleviates the high costs of system and process redundancy within commercial lending operations, as well as increasing transparency, improving risk management and simplifying entry into new markets or business lines. The latest version of the solution, enhanced to support ARR, provides banks with core capabilities to issue new loans using the replacement rates, allowing them to begin to transition their existing LIBOR portfolio safely.

Fusion LIBOR Transition Calculator will help KBC Bank manage the transition before the ARR module is rolled out. It enables market participants to calculate their own ARR or Risk-Free Rates (RFR) and interest accruals. The calculator service independently accesses the ARR/RFR from external official sources, such as the Federal Reserve Bank of New York, for the secured overnight financing rate (SOFR). It then calculates compounded in arrears rates and daily non-cumulative compounded rates, along with corresponding interest accrual amounts for a set of inputs. Depending upon the rate method chosen, the calculator has the flexibility to calculate the daily compounding rates for the whole period or only for the end date. It follows Finastra’s Fusion Loan IQ ARR calculations, which gives market participants consistent and accurate results.

Built on FusionFabric.cloud, Finastra’s open innovation platform, the calculator’s open API facilitates the integration with systems that don’t yet have a solution in place for calculating ARR/RFR rates. This significantly reduces operational risk.

“The shift away from LIBOR is the biggest change the market has seen in lending over the last three decades. It is also a once-in-a-lifetime opportunity to innovate and serve customers better, and so the need for a flexible service that can expand over time is a must,” said Robert Downs, Global Head of Corporate and Syndicated Lending at Finastra. “Our Fusion Loan IQ ARR module and the transition calculator are designed to keep pace as ARR methodologies and conventions evolve, protecting our customers from risks associated with complex system changes and ultimately future-proofing their businesses.”

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Finance

How contactless payments helped a pizzeria survive 

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How contactless payments helped a pizzeria survive  2

By Kaushalya Somasundaram, Head of Payments Partnerships & Industry Relations at Square, UK

The Covid-19 pandemic has caused continued uncertainty for the hospitality industry. Many have been forced to pause operations or adjust the operations so they can keep trading.

Businesses are continuing to address social distancing rules by rapidly accelerating their digital capabilities. From bakeries to pubs, we have witnessed businesses shift to selling online, offering click and collect services to making their goods available for delivery.

But one of the most integral ways technology is aiding these businesses is on the payment front.

Contactless payments and cashless businesses have been around for years, gaining popularity for the ease and convenience it offers businesses and customers alike. However a new significance has been  placed on all technologies that reduce physical contact and time needed to complete a transaction.

It’s no surprise the number of cashless businesses in the food and drink sector is skyrocketing, from 8% in January 2020 pre-lockdown, to 33% in July 2020.

Contactless payment technology has played a vital role in the survival of many businesses, including a pop-up pizza business based in Cambourne, Cambridgeshire.

From hobby to hub

When Sam Corban first tried his hand at pizza-making, it was out of interest. But after moving to Cambourne, he decided to turn what had quickly become a hobby into a business.

Sam approached local council offices to seek support in getting his idea for an artisan pizza pop-up business off the ground. And in February 2017, 400° Pizzeria fired up its oven for the first time, trading every Friday night at the Cambourne Cricket Pavilion.

Prior to the pandemic, Sam’s trademark 24-hour slow proof dough – which had taken him almost nine months to perfect – had garnered him a fond reputation around the village. It wasn’t long before his popularity meant he could hire his first staff member.

However, fostering a close relationship with his local community has been equally essential to Sam’s success. He has several pizzas named after customers – from the classic Nduja to The Debbie – and often asks his regulars for feedback regarding new recipes.

The success of his pop-up has influenced other local artisan street food providers, who’ve since joined him at the Pavilion on Fridays which has helped create a local hub for Cambourne locals.

Once the pandemic hit and a new normal descended on the world, Sam knew he had to react quickly and intelligently if he was going to continue doing business and be a positive force in his community.

And that all started with how he took payments.

The unexpected virtues of contactless

Despite accepting cash, Sam has always encouraged his customers to pay with card whenever possible, even pre-pandemic. It’s simply a quicker way to complete a transaction, especially now most bank cards have contactless chips.

After trying out a few contactless terminals, Sam decided to use the Square Terminal, an all-in-one card machine for everything from managing items and taking payments to printing receipts and getting paid. Once the pandemic started it was a no brainer to become completely cashless. “As all my payments are processed seamlessly through the Square Terminal, I’m cash free,” explains Sam. “This means I can process orders faster and don’t have to deal with hygiene issues posed by taking cash.” 

And, the peace of mind this offers customers can’t be overstated. It means they can get a slice of community and normalcy (along with pizza) in a time where they’re cooped up at home and need to keep contact to a minimum.

As a result, Sam was able to keep operating safely and successfully throughout 2020.

A future-proofed pizzeria

Sam’s success is closely linked to how he connects and engages with his local community. As well as his weekly pizza pop up, he’s also started stocking his van with dry goods such as flour and pasta to deliver goods to those who can’t leave the house. He has even started offering home pizza making kits – giving local families a fun way to jump on the lockdown home baking trend.

These acts, plus the digital transformation he’s undergone over the course of the year, will resonate positively for the pizzeria long after this pandemic is past. Not only has he cemented his place in his local community, but the technology he’s adopted has helped him flex his operations.

As Sam shows us all, with a sprinkle of technology and a healthy serving of community spirit, every crisis can also be an opportunity to grow and evolve.

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Ahead of expected IPO, Deliveroo recruits Next’s Wolfson to board

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Ahead of expected IPO, Deliveroo recruits Next's Wolfson to board 3

LONDON (Reuters) – Britain’s Deliveroo said on Tuesday it has beefed up its board ahead of an expected initial public offering this year with the appointment of Simon Wolfson, the veteran boss of clothing retailer Next, as a non-executive director.

The food delivery company said on Sunday it had raised a further $180 million from existing investors, including minority shareholder Amazon, in a move that values the business at more than $7 billion.

Deliveroo is set to hold an IPO in the coming months, in what would be the biggest new share issue in London for three years.

Wolfson’s appointment comes after Deliveroo named Claudia Arney as the company’s first chair in November.

Deliveroo founder and CEO Will Shu said Wolfson would bring “great knowledge and insight” to the board.

Wolfson has been Next’s CEO since 2001.

He is also a peer of Britain’s ruling Conservative Party, sitting in the upper house of parliament.

(Reporting by James Davey and Paul Sandle; editing by Sarah Young and Pravin Char)

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