FinTech Combats Accounts Receivable’s Crypto Anxieties

As more corporations gain interest in embracing cryptocurrency, the logistics of having crypto on the books continue to stand in the way of supporting efforts to accept digital currency as payment — an increasingly attractive proposition for businesses and their customers.

Despite advances in invoicing, B2B payments and accounts receivable (AR) technology, popular platforms are rarely able to support crypto payments. And that’s only part of the challenge when stepping into the digital currency world, according to Request Network Co-Founder and Chief Financial Officer Christophe Lassuyt.

As Lassuyt told PYMNTS, organizations have a compliance and workflow minefield to navigate when embracing cryptocurrency payments, reconciling, using those assets to make their own payments, paying taxes, reporting and more. But holding crypto on the books is not as risky or arduous as many firms might think — only if businesses adopt the appropriate technology to support their crypto endeavors.

Crypto’s Accounts Receivable Pain Points

With cryptocurrency volatility often cited as the biggest source of risk and friction for businesses, it’s not a surprise that figuring out how to accept crypto in the AR department and ensure that those crypto payments accurately reflect the value of an invoice due is a challenge.

Businesses interested in accepting crypto are often reliant upon their legacy or existing invoicing and AR solutions that do not support crypto, thus requiring finance professionals to send a list of cryptocurrency addresses along with an invoice.

Those addresses are “not so easy to read, exchange and handle safely in order to get paid,” explained Lassuyt. “Sending funds to the wrong address is irreversible and can lead to a loss of funds. Copy-pasting is the weakest link in your financial security.”

Request Network stepped in earlier this month to address this particular pain point with a new collaboration with Chainlink. Chainlink will integrate its price feed technology within the Request Invoicing app, allowing Request to support invoices denominated in fiat currency with support for acceptance of crypto payments.

The solution tackles another major hurdle for embracing crypto in AR and other financial workflows. Often, the biggest headache with crypto related transactions is a lack of auditable paper trail.

Historically, said Lassuyt, “businesses had no method in automating entries for crypto in an accounting software, doing batch payment in crypto [or] keeping track of the ever-growing list of cryptos available with their price volatility.”

Request facilitates that paper trail denominated in fiat to support enhanced bookkeeping, auditing and reporting processes, negating the need for finance professionals to have to manually calculate and input exchange rates.

Supporting Crypto Through Technology

Stepping into the world of crypto can be lucrative and a sound investment strategy. Yet financial platforms have been designed for the world of fiat, and according to Lassuyt, crypto-related needs pertaining to record keeping and automation have revealed some of the shortcomings of those solutions.

“Accounting and invoicing software in our capitalistic era aren’t working together,” he said, adding that FinTech tools like Xero and Quickbooks are not interoperable. An AR professional that generates an invoice in Xero and sends it to an accounts payable (AP) department using Quickbooks is creating a non-optimal, siloed user experience.

This pain point is another opportunity for distributed ledger technology (DLT) to step in, with Lassuyt noting that invoicing technology built on DLT that is interoperable “serves the interests of the invoice data holders — the companies — rather than being blocked in a software without the ability to make it work with others.”

DLT supports the opportunity for firms to tackle other AR-related challenges, like a lack of transparency into payment. Smart contracts can ensure payments are made and funds are released on time.

Having the ability to accept payments on those invoices in crypto is another opportunity for both sides of the B2B payments equation. In addition to enabling an invoicing-side business to hold crypto on the books and benefit from interest rates, smart contracts can also facilitate preemptive invoice payments from the payor. When it comes time to release those funds to the invoicing firm, the payor can then receive a payout from interest that has accrued between the time the invoice was paid and when that payment was released to the supplier.

While many organizations continue to be reluctant about the perceived risks of operating in a crypto arena, Lassuyt noted that the majority of non-native-crypto businesses that do step into the space are working with stablecoins that do not have a material impact on the balance sheet as they are pegged to the U.S. dollar. Yet they can still benefit from a digital currency that can facilitate faster international transfers and payments, for instance.

For firms that do hold volatile cryptocurrencies on the balance sheet, it is vital that these organizations have the proper tools in place to account for any gains or losses that result from that currency, and make it possible for those businesses to actually interact with crypto in areas like AP and AR. Having support for paper trails and platform interoperability is key, and once those solutions are in place, organizations can face significantly less friction, Lassuyt noted.

“Invoices and their payments become code, therefore making invoice issuers thrive in a secured and trustless environment,” he said of the value of this technology. “Business becomes possible between any company, anywhere in the world.”