In B2B, expansion is both goal and challenge, especially in cross-border situations, where collecting on receivables can be a lengthy and daunting process. Flywire EVP & GM Jeff Althaus tells PYMNTS’ Karen Webster about the ways technology can streamline manual processes for companies large and small.
For corporate payments — that is, money changing hands between firms — collecting on receivables can be a challenge. Perhaps a rule of thumb can be: the longer the supply chain, the longer the wait for payments.
In an interview with PYMNTS’ Karen Webster, Jeff Althaus, executive vice president and general manager at Flywire stated that “if you look at the payables side of the equation, it is much, much easier to send money” than to collect it.
Banks are set up to help corporations and individuals send money to various countries, and for corporates, there is choice: There are alternatives to the banks that promise to help send money more efficiently. The complexity comes with receivables, he continued, and Flywire has, over the past several years, been building out a network to do just that.
In terms of complexity, it is crucial to understand the regulatory landscape in which a firm seeks to do business, said the executive.
Many payment providers are set up to aid transactions on a low value, low volume basis, Althaus said, “but as the size of cross-border payments gets into the thousands, tens of thousands and hundreds of thousands of dollars, this opens up a whole other level of complexity from the view of compliance” and the process of moving money.
With the collection of receivables, said Webster, there’s also the concern extant over timing — namely, how quickly money moves (or conversely, does not).
For cash flow that is efficient at the maximum level, said Althaus, top of mind issues include the reduction of DSOs. Flywire also looks at reconciliation, where such payments of size have traditionally been done through international wire transfers.”
And wire transfers, he said, are a manually intensive process. The manual process can involve taking an invoice in person to the bank, in certain countries, and, with certain documents in hand, wire the money.
Flywire, he said, seeks to “localize all international transactions.” The business will send an invoice out from the United States; “because we have such a large network and footprint around the world, we are able to take that invoice and, instead of forcing the international layer of the payment mechanism, we provide an option to pay in local currency. For that invoice sent from the U.S. to Spain or Japan … the customer now has options to pay using a bank transfer, local currency or credit card.”
That local payment is done electronically, he said. “This takes some of the burden off of the companies that are paying the invoices, by eliminating the paperwork, bank trips or the need to understand exchange rates or fees. They will know exactly the amount that hits the account, and whether there are discrepancies in payments.”
In reference to the power within B2B payments that may be held by larger firms (such as at Fortune 200 companies), where vendor payments terms are dictated rather than agreed upon and the balance of power is with the bigger firm as to minutiae to be addressed with invoices, Althaus stated that Flywire’s B2B platform is an advanced one.
The platform itself has the ability to link the systems of both large and small firms. Flywire has found that at either end of the transaction, automation is key, because those mandates from the larger firms are easily satisfied, Althaus continued.