In this guest post Neil Radley, non-executive director of Invapay, explores how to overcome ‘Fear, Uncertainty and Doubt’ to change the payment paradigm for the better.
‘No-one ever got fired for buying IBM’ is a well-worn mantra in the corporate world. In summary, it’s a euphemism for ‘play it safe’. It has origins in the much older ‘FUD factor’ which is widely used in business and politics. ‘Fear, Uncertainty and Doubt (FUD)’ are used by incumbents to scare people away from change.
We have seen this negativity used countless times in the recent general election campaigning as each side uses fear to reinforce its own agenda. Any really interesting and transformative policies are battered down through highlighting the risks and downsides backed up by a plethora of largely uncheckable statistics.
In the world of large corporates this FUD factor abounds many times over. It’s a double edged sword for their trading partners. For many smaller, more innovative businesses it means that they can steal business from under the noses of their bigger rivals. This is especially so in the business to consumer space where the end consumer is the final arbiter of choice.
More frustratingly, in the business to business space, when innovative smaller businesses want to sell their wares to the larger corporate, it can be frustrating. It’s not just getting people to buy your goods. Having scaled Everest you think all should be well. Deliver the goods and then get paid. If only it was that simple! You then have to navigate the secondary mountain peak of accounts payable. The order has to match to the goods received note which in turn must match the invoice, but it’s only then that the fun and games start. Getting paid is the biggest trial of all. Why shouldn’t you get paid immediately? That’s the question.
Working capital management has been around in its current guise ever since business was invented. Maximise Days Payables Outstanding (DPO), minimise Days Receivable Outstanding (DRO) and minimise levels of stock. PWC, noting an upturn in the Global economy, calculated that businesses need €309bn of increased cash to take advantage of the opportunities presented. Improving working capital is therefore a key objective. The increasing Days Payables Outstanding (DPO) in Europe (43 days) is seen as a positive. This is despite the political and social clamour to get Government and businesses to pay quicker.
I think we need some better informed and more radical thinking in the way in which the settlement of business debts is conducted. Encouragingly, I believe we are on the cusp of a change in the paradigm of the existing buying model. A close look at the recent Tesco situation is one obvious example. Trying to forever extend payment cycles caused the system to simply ‘Pop!’ and crisis ensued.
What we need is a change of the current paradigm. Thomas Kuhn, the influential philosopher ,wrote extensively about paradigms and how they are changed. One of the major observations he made was that it is only when a crisis occurs that change happens. A few statistical anomalies are argued away but a cascade of events causing the existing model to break will cause the crisis.
‘E-invoicing’ and ‘E-billing’ have been touted as the solution, but these are merely logical extensions to the current ‘broken’ process. What we need is revolutionary thinking. According to Ghandi a revolutionary mind is an open mind not committed to views. Unfortunately, one of the key traits of leaders employed by major corporations is that of having a world view with opinions. The key trait of those who work for them is that they don’t rock the boat.
At least there are some revolutionary minds out in the business world. Sid Vasili, CEO of Invapay is one such guru. He advocates a model whereby suppliers get paid immediately but the buying organisation can still maintain DPO and earn income from the transaction.
More of this radical thinking is needed if a Tesco situation is not to be repeated. It’s likely that the change will happen and the paradigm will shift. In this case you will be fired for buying IBM because it has become yesterday’s business. Who knows? Perhaps we can revolutionise FUD itself to mean Fresh Unfettered Decision-making.
It's banks, not government agencies, that the British people trust to deliver biometric authentication payment services, says a new Visa study.
With less than two weeks to go until the US liability shift hits its first anniversary, MasterCard published new data evidencing the positive impact the technology is having on issuing banks, merchants and consumers, as well as saying adoption continues to grow.
Three years since the public consultation, and a year since the £20 was revealed to be the next note to have a makeover, 13th September marks the day that the new £5 polymer bank note enters into circulation.
Global card payments are growing at twice the rate of the number of cards in circulation as acceptance booms and consumer habits shift away from cash.