In a challenging economy, companies must focus on the basics, treasury and other key areas, Julie Lubell, Global Head of Trends & Advisory at J.P. Morgan Payments, writes in the new PYMNTS eBook, “2023 Payments New Year’s Resolutions.”
With 2022 being one of the most tumultuous years in living memory, there are many key areas that the payments industry must focus on in the coming year to help companies navigate a challenging operating environment.
With high inflation, rising interest rates, supply chain disruptions and geopolitical conflict all presenting sizeable risks, there is a current shift in mindset from opportunity to resilience. This means that companies are re-focusing on the basics, such as ensuring liquidity management and working capital as efficiently as possible. Subsequently, we expect concepts like the in-house bank to come back into vogue.
As payments have grown in importance and become a key driver of many new business models, the treasury function has become more strategic. When building a new product, how you allow someone to pay for it, the methods they can use, and the currencies that are enabled are integral to the project’s overall success. As a result, treasurers are becoming involved in product-level decisioning. They are collaborating, partnering and influencing new areas of the organization with which they may not have previously dealt.
As companies become more digitally mature, they are expanding their online platforms to include a vast array of new products and services, some of which will be provided by third parties. The idea is to create a complete end-to-end consumer journey within their operating space. Take an area like mobility. It is no longer just about selling someone a car. A modern connected vehicle is a consumer device. It will offer various ancillary services through its in-car console, from ordering parts remotely to paying for heated seats as a subscription to pre-ordering a coffee at a gas station. Treasury is now involved at these interconnecting purchase points, enabling smooth and seamless payments.
Another important area for companies to consider is strengthening their environmental, social and governance standards (ESG). With concerns about greenwashing and a lack of tangible results, companies are becoming more innovative and strategic regarding ESG. This includes integrating ESG solutions into everyday tools and processes. Procurement and payables will play a crucial role as deciding which companies and suppliers to partner with can majorly impact the overall ESG agenda.
Finally, companies worldwide will have to get comfortable with certain uncertainty. In other words, further disruption is around the corner, and we don’t know where and what form it will take. Companies need to be pragmatic and focused in their investment strategy and make calculated bets to bring tangible benefits to their business. Now is a good time to step back and take stock and make smart decisions that will pay off in the years to come. By analyzing their transaction and client data, they will be better able to forecast, build risk scenarios and make impactful long- and short-term business decisions in a very dynamic environment.
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