Global trends and opportunities in B2B payments: A look into how businesses can take advantage of automated digital solutions to accelerate growth.

Digital payments have helped businesses get paid safely and efficiently through the COVID-19 lockdowns and associated restrictions, but new challenges are arising as economies reopen. With supply chain disruptions, the ‘great resignation’, rising inputs such as fuel, and the expense of reopening top of mind for businesses, now is an opportune time to build on the processes optimised throughout the pandemic, especially across B2B trade. 

Transforming payment processes with digital technology not only helps businesses get paid faster but implementing integrated cloud-based solutions delivers many efficiency-based benefits for businesses. Which is why Spenda, a leader in B2B payment and lending solutions, leveraged extensive research to create a paper that delivers a holistic overview of insights into the global state of B2B payments and how businesses can take advantage of trends and innovations to accelerate growth. 

Spenda’s CEO, Adrian Floate said:Businesses pay late for many reasons, most commonly because cash flow is hampered as a result of ageing receivables. While regulatory changes and Government incentives are a valid step and may reduce payment times, they don’t resolve the root cause of late payments.

Implementing the right technology can address late and non-payment risk at its root while transforming how businesses manage their finances from credit management to accessing working capital,” he continues.

Trends and opportunities in B2B payments – Some highlights

  • Over half of Australia’s B2B payments are processed late, and it’s a major resource drain: More than 53% of B2B receivables in Australia are paid late. Not only do late payments cause cash flow problems, but chasing up these payments takes valuable time too. 
  • Global digital B2B payments trends: e-invoicing and virtual cards lead the way: Adoption rates of digital B2B payments technologies vary around the world. Currently, developing regions in  Africa and South-East Asia are leading the way with growth driven by the uptake of innovations such as virtual cards and it’s projected that the global virtual card transaction value will reach $6.8 trillion by 2026
  • Mandates and Policies are a catalyst for digital adoption: In Australia for example, the 2022/23 Federal Budget cash flow promise and Payment Times Reporting Scheme are a valid step and may reduce payment times. Similarly, Governments around the world are planning to accelerate e-invoicing adoption for businesses in the coming years. And while this is a valid step and may reduce payment times, it doesn’t resolve the root cause of late payments and inefficiencies across the supply chain — outdated processes and payment infrastructure. 

Infographic – Digital Transformation in B2B Payments


Mr Floate added: “COVID-19 accelerated the use of smart technology in the supply chain, providing a starting point for companies to expand efficient systems to other business areas. Businesses that implement integrated technology solutions can better maximise their ROI while transforming systems and processes across the organisation. And it’s those companies that are proactive now that will gain a competitive edge, while experiencing lower costs and stronger financial management.”

For a copy of the full report, please visit: https://spenda.co/trends-opportunities-in-b2b-payments/


About Spenda:

Spenda an ASX listed company (ASX:SPX) with over 20 years’ experience in delivering smart B2B software applications, flexible payment and lending solutions, and integration services that help improve the way businesses trade and get paid.

Spenda’s solution enables businesses to transform with fast, error-free digital efficiency and aims to boost cash flow across the entire supply chain.

For more information, please visit www.spenda.co


Media Contact

Ola Polczynski

Marketing Manager at Spenda

ola.polczynski@spenda.co

FinSS Global announces partnership with Uplinq, the global SME Credit Assessment platform

Australian technology and digital transformation firm, Fintech Solutions and Services Global (FinSS Global) is delighted to announce a partnership with Uplinq, the first global credit assessment platform for SME lenders.

The partnership signifies the technology companies’ joint mission in helping banks and lenders deliver lending innovation and financial inclusion for their small business customers, the backbone of economies, across the globe.

Leveraging Uplinq’s unique and advanced AI/ML technology, which has served as a foundation for over $1.4 Trillion in underwritten loans globally, FinSS Global plan to incorporate the solution within its Small Business Lending Dashboard product and offer it to banks and lenders within the A/NZ market.

The new product will be known as the Credit Assessment and Business Lending Enterprise Dashboard (CABLED), and will aggregate data from multiple sources, such as bank accounts, accounting systems and government and industry sources, ensuring a complete picture of an SME’s financial health and lending/borrowing viability is available within one visual dashboard, greatly improving the accuracy and timeliness of the pre-approval process. 

The technology will further enable traditional SME Bank Lenders to compete against FinTech and NeoBank challengers by maintaining and growing their customer base, while being able to innovate, digitise and build closer value-based relationships with existing and new customers. CABLED will offer a much superior solution by incorporating a myriad of new datapoints, elevating the data available to bank and lending decision makers, and ultimately benefitting the small business customer. 

Speaking on the partnership, Dallas Newton, CEO and Co-Founder at FinSS Global, commented: “Our partnership with Uplinq is very exciting as it is a proven, global credit assessment platform for SME Lenders, that we believe to be a first here in Australia. Developing CABLED extends our Business Lending Dashboard products to something very new and unique to the entire A/NZ region.

“The new dimension expands our capability by being able to leverage many additional datapoints from industry, government and commercial sources to better understand, beyond pure financial data, a borrower’s suitability for, and propensity to service their requested loan.

“Additionally, for those lenders interested in being better social citizens, it adds another dimension beyond traditional business lending, supporting the servicing of the underserved, unbanked, minority and immigrant small business owner. Another growing sector, here and abroad.”

Ron Benegbi, Founder and CEO of Uplinq commented: “We are thrilled with Uplinq’s partnership with FinSS Global. We have a kindred goal, which is to bring financial inclusion to all SMEs. With FinSS Global incorporating our technology to help power their lending dashboard, CABLED, it now means lenders in the Australian and New Zealand markets aren’t just extracting data from traditional financial sources like bank account and accounting systems, but from proximity/access to markets, access to health and education services, family experiences in other businesses and utility, phone and payment history, to name but a few. All these additional factors have an impact on an SME’s day-to-day finances. 

“We look forward to working together and expanding the lending landscape for all small business and micro business owners.”


To find out more about FinSS, please visit: https://finssglobal.com/ 

To find out more about Uplinq, please visit: https://www.uplinq.co/ 

 


Notes to editors: 

About FinSS Global

Fintech Solutions and Services (Global) Pty Ltd (FinSS Global) was established in Melbourne, Australia in 2019 as an organisation focused on Compliance, Collection Management, Banking Solutions, with a focus on SMB Lending enablement, and Digital Transformation. 

Our target market is the small to medium Australian Authorised Deposit-taking Institutions (ADIs) and Lenders/Credit Providers. We offer our own leading edge (digital) solutions, consulting and expertise, as well as solutions and capabilities from key like-minded Strategic Partners, to cost-effectively meet the needs of our target market.


About Uplinq

Uplinq is the first, global credit assessment platform of its kind. The company’s solution has been built specifically for small business lenders. Uplinq offers lenders confidence, analysing billions of unique and validated data signals that go beyond traditional credit indicators, to make the most accurate lending decisions possible. The company’s platform allows lenders to gain insights on all SMBs in their portfolio, while empowering them to better support the underserved, unbanked, minority and immigrant small business owner.

Envestnet | Yodlee onboards WeMoney as first Open Banking Solution Customer in Australia

Envestnet® | Yodlee® – a leading data aggregation and analytics platform powering dynamic, cloud-based innovation for digital financial services – has today begun onboarding Australian personal finance financial wellness and budgeting app, WeMoney, as its first existing customer to move from traditional data aggregation to Envestnet | Yodlee’s fully accredited and “Active” Open Banking solution Fastlink 4. The partnership with WeMoney becomes one of the first Outsourced Service Provider (OSP) and Accredited Data Recipient (ADR) relationships under Australia’s Consumer Data Right (CDR) regulation, which is a significant step in Australia’s open banking journey.

FastLink 4 User Interface, which soft launched in Australia in October 2021, has made Envestnet | Yodlee the first provider with two distinct advantages in-market: access to the most comprehensive CDR and non-CDR data sets, and access to multi-country, global open banking connections in regions including the UK and the U.S.

Envestnet | Yodlee’s FastLink 4 is the latest version of the user interface that enables consumers to securely and easily connect all their financial accounts in seconds, allowing financial service providers (FSPs) to optimise consumer experience. FastLink 4 supports Open Banking, complimenting the company’s existing data aggregation capabilities. This enables FSPs to access both CDR and non-CDR data, and offer personalised digital banking, lending, verification, and financial wellness experiences that rely on aggregated data. The result of this hybrid approach to data provisioning, is that Envestnet | Yodlee can provide the broadest coverage of financial data in the local market, including data streams such as superannuation, which are not yet covered under Australia’s CDR.

“FastLink 4’s presence in the Aussie market and onboarding WeMoney as Envestnet | Yodlee’s first local Open Banking customer marks an important milestone in our Open Banking journey,” said Tonia Berglund, Director of Product at Envestnet |Yodlee. “We are now able to provide a truly hybrid solution – meaning that Australian financial organisations like WeMoney can tap into both CDR and non-CDR data sets under one roof: the perfect solution during these early stages of CDR.”

Berglund continues, “Because of our size as an organisation as well the 20 years’ experience in aggregating data, we are able to offer the advantages and experience of a large company alongside some of the broadest data coverage and support available in the market.”

Speaking about becoming the first customer of FastLink 4 in Australia and following WeMoney’s recent CDR accreditation, Founder & CEO at WeMoney, Dan Jovevski, said: “The WeMoney Community and our team are incredibly excited about the direction of the Consumer Data Right and how tools like FastLink 4 will empower consumers to take advantage of more streamlined ways to improving financial wellness. We are very optimistic about the future developments in this space and the expansion of our partnership with Envestnet | Yodlee.”

Minister for Superannuation, Financial Services and the Digital Economy, and Women’s Economic Security, Jane Hume said, “This is an exciting development and demonstrates the importance of the changes to rules introduced last year to increase participation in the CDR and the direct flow-on benefits to consumers. New CDR-powered apps that support financial wellness will help grow Australia’s financial literacy.”

Envestnet | Yodlee has been a collaborative partner in shaping Open Banking and open finance technologies and policies across the AU, UK and U.S. and holds a unique position in being able to support companies of all sizes – from large banks to the smallest FinTechs – to innovate and best serve their customers both domestically and overseas.

This announcement follows a number of new regulatory developments unveiled by the Australian government that will allow for increased participation in the country’s Open Banking regime. The six new accreditation models will reduce barriers to participation by enabling organisations to securely access CDR data via accredited providers, such as Envestnet | Yodlee, without needing to become accredited data recipients themselves.

Frollo launches Open Banking powered Financial Passport for consumers

Giving every Australian access to a PDF snapshot of their finances for free.

SYDNEY, 26 APRIL 2022Frollo, Australia’s leading Open Banking provider, has launched a free tool for consumers to get a snapshot of their finances. Powered by Open Banking, the ‘Financial Passport’ provides an easy to understand overview of income, expenditure, assets and liabilities for the last twelve months. 

Consumers can use the PDF to better understand their financial position and borrowing power or share it with their broker to facilitate a conversation about their financial future. The report includes a monthly overview of a users’ income and expenses, an overview of all their assets & liabilities and a detailed breakdown of where they spent their money.

The Financial Passport is available for consumers in Frollo’s free personal finance management app as an additional feature. In the app, consumers can link their financial accounts using Open Banking to get an overview of their finances, set budgets and track their financial goals. Now, they can also download an easy to understand snapshot of their finances as a PDF.

Kris Davant (Frollo’s Head of Product) explains: The Frollo money management app helps people improve their finances by providing a full overview of their accounts, smart insights and tools to take action. A logical extension of this is to help them be more prepared for one of the biggest financial decisions they’ll make in their life – applying for a mortgage.”

In addition to making the Financial Passport available to consumers in the Frollo app, Frollo also works with lenders, brokers and fintechs to streamline their lending decisions by integrating directly into their application process.


Media assets

https://frollo.com.au/blog/financial-passport-in-frollo-app/ 


About Frollo

Frollo is a purpose-driven fintech and Australia’s leading Open Banking intermediary. We help businesses use Open Banking data to deliver better customer outcomes. From reducing debt and increasing savings, to providing a better, more personalised customer experience.

Our modular, end-to-end Open Banking platform enables businesses to bring Open Banking powered use cases to market quickly by leveraging Australia’s most advanced and reliable CDR Gateway, with plug & play access to lending, personal finance management and customer onboarding solutions.

Our clients include Beyond Bank, Volt, REA Group, P&N Bank, bcu and Bank of Queensland.


For media enquiries

Piet van den Boer

Frollo

0468 375783

piet@frollo.us 

Real-time payments in Australia – Why corporates should get on board

Following on from the recent publication of our report on the Four Key Trends in Australian Payments, we dig a little deeper into the first trend – real-time payments – with a particular focus on what this means for businesses.

 

A BRIEF HISTORY OF REAL-TIME PAYMENTS IN AUSTRALIA

To date, real-time account-to-account payment enablement has primarily focused on consumers – it has been four years since the Australian public were first introduced to the concept through an advertising campaign featuring a forgetful fish-headed man named Gary P Goldfish. Gary reassured us that anyone can have a “goldfish moment”, where they can’t remember their bank account details. A problem solved by the simple addressing feature of the New Payments Platform (NPP).

NPP payments were slow to take off initially in Australia. Some banks struggled to implement real-time payment services, meaning early adopters often found the account they wanted to pay was not NPP-enabled. In other instances, upper payment thresholds restricted NPP use in some scenarios.

Despite these challenges, transaction volumes have continued to grow thanks in some part to smaller banks pushing regular Direct Entry (batch) transactions through the real-time payments infrastructure. Daily transactions now average 2.8 million, with over 76 million accounts reachable via the New Payments Platform.

Whether or not consumers realise they are using real-time payment rails is debatable. The underlying payment rails used by retail banks are not always obvious to consumers – nor need they be.

The same cannot be said for corporate customers, however. Often, real-time payments differ in price, meaning corporates need clarity on how their transaction will be routed. It’s perfectly understandable then that retail adoption of real-time payments has been faster than that of their corporate counterparts – but this may be set to change with the advent of payment mandates later this year.

 

CORPORATE PAYMENTS – IF IT’S NOT BROKEN, WHY FIX IT?

Compared with consumer payments, corporate payments are a little more complex. A typical large corporate will likely hold many accounts, spread across numerous legal entities. In the case of multinational organisations, those accounts might be domiciled in different currencies and located across different jurisdictions.

Batch payments, despite their limitations, have in some respect simplified corporate payments. Grouping payments into batches means thousands of outgoing payments can be approved and processed collectively. Additionally, treasury teams can view balances with some certainty that their cash position won’t change until the next batch, simplifying liquidity management.

Corporate treasurers might find themselves wondering if there is a need to embrace the brave new world of real-time payments at all. Here are three reasons they should reconsider.

  1. CUSTOMER EXPERIENCE

Avoiding change is rarely a sustainable long-term position. Disruptive business models tend to leverage innovative technologies to deliver a superior customer experience.

Historically, cash was the dominant form of payment, thanks in part to confidence in payment finality. Cards and electronic money solutions like PayPal were able to offer an improved customer experience by retaining confidence in payment finality, whilst avoiding negative attributes such as cash handling. Uber presents a good example of a business that has leapfrogged its competitors using improvements in payments technology to deliver a superior customer experience.

Fast forward to today, where NPP is working towards the launch of PayTo, which will revolutionise the customer experience for recurring payments, amongst other use cases. PayTo enables consumers to view and manage payment mandates from within their mobile and internet banking services, doing away with paper-based Direct Debit Request forms. Furthermore, payment mandates remain in place in the event a consumer switches banks. PayTo provides an example of where continued investment in modern payment rails looks set to move the dial on customer experience.

  1. RICH DATA

A key driver in the shift to real-time payments is not speed but data. The New Payments Platform leverages ISO 20022 messages, which include significantly more data than that made available through Direct Entry. Some corporates are already grappling with the impact of this, as NPP transactions can carry a 280-character text description, impacting automated reconciliation processes.

Tech-savvy multinational corporates have long sought real-time ISO 20022 account data. Whilst message variants will still present some challenges, adoption of ISO 20022 brings a corporate treasury hub one step closer to a wholistic view of their global cash position. Furthermore, using NPP, corporates that multi-bank are empowered with the ability to shift funds between domestic banks in real time.

For those businesses who choose to embrace PayTo, benefits include account validation, fund verification and visibility over paused and amended payment schedules. With the recent merging of NPP, BPAY and EFTPOS under the Australian Payments Plus umbrella, I anticipate we will see increasingly data-rich receivable solutions come to market, which will undoubtedly trigger a competitive response from international schemes. I would expect this competition to make real-time payment adoption even more compelling for corporates.

Whether it be for fraud mitigation, hyper personalisation, reconciliation or suspicious matter reporting, the data associated with payments will play an increasingly important role in automation, efficiency, compliance and customer experience.

 

  1. THE RETIREMENT OF LEGACY RAILS

Finally, if you are still unconvinced that real-time payment adoption will become inevitable, then look no further than AusPayNet’s Feb 22 Payments Monitor Newsletter. CEO Andy White references the industry discussions relating to the closure of Australia’s Direct Entry batch processing system. With some 9.6 trillion dollars’ worth of credits and 3.6 trillion dollars of debits processed in 2021, decommissioning will not occur quickly. I wouldn’t be surprised to see a long tail of corporate customers who end up transitioning over to some form of Direct Entry emulator. But what sort of business wants to find themselves truncating valuable customer data to replicate a 1980s payments experience?

WHERE TO START?

Before embracing real-time payments, corporates should carefully consider how the change will impact their people, processes and technology. The opportunity of 24/7 payments presents the prospect of round-the-clock payment approvals, fraud and liquidity management. In addition, corporates will need to think carefully about data and future developments in payments. You may find benefit in partnering with an organisation that has broad experience implementing payments modernisation and architectural change, with global visibility on payment trends, such as Endava.

As with any significant change, planning is essential. I’ve invested more than 10 years of my career overseeing payable and receivable payment projects and am well aware of the tech debt which decades of mergers, acquisitions, re-structures and budget constraints can have on a corporate’s technology stack. Implementing real-time payments on top of legacy architecture poses the risk of further adding to tech debt, so stepping back and taking a wholistic view of where you are and where you would like to be is a great first step.

Once you have clarity on where it is you would like to get to, you can start to plan exactly how you will get there. They say a journey of a thousand miles begins with a single step, which is perhaps why Gary P Goldfish had legs, not fins.

CONTINUE THE CONVERSATION


DAVID MARSH

PRINCIPAL INDUSTRY CONSULTANT

With over 13 years in the payments industry, David’s career has been centred around innovation, transactional banking integration, and technology. Having worked with government clients, corporates, and the industry association for payments, he brings broad experience and a hands-on perspective to challenges and opportunities in the payments space. Away from work, family commitments permitting, David enjoys mountain biking, bouldering and DJing.

MYOB’s new Loans and Finance hub frees funds faster for SMEs

From today MYOB customers have direct access to receive funds in as little as three hours via a new cashflow and lending hub, as the business management platform deepens its integration with partners Butn and Valiant. The launch is welcome news for small and medium sized enterprises (SMEs), with MYOB Business Monitor research from January 2022 showing 72% of businesses who had accessed financing found the process takes too long, and 84% said when they need funding, they need it straight away.

Loans and Finance, available in MYOB Business, provides SMEs with two pathways to improve short-term cashflow and increase funds for longer term growth opportunities. Invoice financing, powered by Butn, gives businesses early access to funds from issued invoices, prior to their due date. Once the customer has registered, these funds can be released as soon as three hours after applying*. Alternatively, SMEs can receive no-obligation quotes from over 80 lenders within 24 hours, with no credit checks, via Valiant.

According to MYOB General Manager of Financial Services, Andrew Baines, providing Loans and Finance to customers is key to helping more SMEs maintain cashflow and business liquidity.

“Cashflow is one of the major bugbears for small business owners, and while our recent SME Success Report shows invoice payment times are improving, small businesses often have outstanding payments which can stall business operations,” Mr Baines said.

“Cashflow inhibitors can have significant impacts, particularly on small businesses. Easy access to loans and finance and, more importantly, fast outcomes in terms of available cash, helps customers take control of their finances so they can focus on running, and building, their business.”

MYOB first announced its investment in Butn in April last year and closely followed by an exclusive partnership with Valiant in June. With both solutions now fully integrated into the business management platform, MYOB customers can unlock the value of these strategic relationships.

“Having Loans and Finance now available in product offers our MYOB Business customers a streamlined experience, connecting them to cashflow solutions without having to spend time sourcing providers.

“Utilising this function as a key part of their invoicing and cashflow activity will enable more businesses to access capital when they need it – a move that will improve business operations for a significant sector of the Australian economy.”

Loans and Finance is available to MYOB Business customers in Australia. For more information on invoice financing or business loans, visit the MYOB website.


For further comment or other information please contact:

Selina Ife, Communications Consultant, MYOB
E: selina.ife@myob.com


About MYOB

MYOB is a leading business platform with a core purpose of helping more businesses in Australia and New Zealand start, survive and succeed. MYOB delivers end-to-end business, financial and accounting solutions direct to businesses employing between 0 and 1000 employees, alongside a network of accountants, bookkeepers and consultants. For more information visit myob.com or follow MYOB on LinkedIn.


About Valiant

Valiant Finance helps Australian business owners find the best loan for their business. Using our market-leading proprietary technology, business owners can explore their financing options online and be supported by our product-agnostic advisory. The platform offers a seamless customer experience, exceptional service, and the ability to submit a single digital application regardless of the lender. Valiant works with over 80 lenders to ensure Australian small business owners are finding finance that supports the growth of their business and saves them valuable time.


About Butn

Butn Limited is an Australian Business-to-Business (‘B2B’) funder innovating the way SMEs fund and grow their businesses. Butn focuses on transactional funding – funding SME businesses through their working capital constraints by financing individual transactions, leveraging the end debtor’s credit. With a vision of “Your Money, Today.” Butn delivers cashflow funding solutions at the click of a Butn having funded over $500 million to Australian businesses since 2015. For more information visit www.butn.co.

FinTech Voice April 21, 2022

Hope you all had a peaceful Easter break. It’s been a busy fortnight with new partnerships, industry announcements and more events round the corner. Watch this space for all the updates. In terms of Finnies, we’re already through the judging phase and the finalists will be announced soon. If you’re looking for speakership opportunities for Intersekt 2022, please reach out to us.

After the success of our first meetup in Adelaide, we’re excited for our second roadshow event on April 27th in Sydney followed by the third in Melbourne on May 4th. Join the FinTech Australia team to connect with our partners and fintechs. Limited seats for these events so please register soon.

On the Policy front, we have some consultations ramping up for the fortnight. The key consultations include the CDR Sectoral Assessment (Open Finance sector – Non-Bank Lending) which was submitted last week, Digital economy regulation settings, the Crypto asset secondary service providers: Licensing and custody requirements and the Statutory Review of the Consumer Data Right. More details about each are mentioned in the advocacy section.

The new episode of FinTech Australia podcast is out. In this series we talk about RegTech – what drives the industry forward and how Australia can be seen as the next RegTech center, globally. Tune into our channel to know more. You can now listen to our podcasts on Apple Podcasts and Spotify.

Interested to know more about UAE fintech market and EU fintech market? We’re co-hosting two webinars with Austrade on 26 April to talk about opportunities and trends in the Middle East market and European market, respectively. Register soon for these events.

Finally, we welcome our newest member this fortnight – DOWNSIZER and FRONTYA PTY LTD

Regards,

Andrew Porter,
CEO,
FinTech Australia

CDR Sectoral Assessment (Open Finance sector – Non-Bank Lending)

Public consultation commenced on 15 March to inform the sectoral assessment for applying the Consumer Data Right to non-bank lending. Sectoral assessments are conducted with reference to the criteria set out in section 56AD the Competition and Consumer Act 2010.

The submission for CDR Sectoral Assessment (Open Finance sector – Non-Bank Lending) was done last week.

Statutory Review of the Consumer Data Right: Issues paper

The paper released on 16 March seeks written feedback on whether the CDR framework is fit-for-purpose to provide benefits for consumers, increase competition, and drive innovation and will inform the Review. It sets out the purpose, Terms of Reference, and context for the review, relevant background on the development of CDR policy and legislation over time, and specific consultation questions. The issues paper can be found here.

Andrew is also meeting with Treasury to share member views on this review. If you would like to share any feedback immediately before we email for written feedback, please reach out.

We are currently seeking member feedback for this review.

Australia’s digital economy regulation settings

The Morrison Government has opened consultation on digital economy regulation settings to position Australia as a leading digital economy and society.

The issues paper sets out some of the opportunities presented by these technologies, and seeks feedback on regulatory issues that may impact innovative businesses, the community and government.

The issues paper is available here.

Consultation closes on 22 April 2022 and submissions are to be made here. We will reach out to our members for inputs.

Crypto asset secondary service providers via Digital Services Act

On 8 December 2021, the Government agreed in‑principle to recommendations made by the Senate Select Committee on Australia as a Financial and Technology Centre in respect of consulting on a licensing and custody regime for crypto asset secondary service providers.

The government is now seeking feedback on the proposals and options outlined in this consultation paper to support minimum standards of conduct by crypto asset secondary service providers and safeguards for consumers.

This consultation closes on 27 May 2022. We will reach out to our members for inputs.

The Taxation Board have also released their terms of reference for their Review of the Tax Treatment of Digital Assets and Transactions in Australia.

📱 Visa brings an opportunity to engage and learn from a community of passionate and purpose-driven creators with their Visa Creator Program. For all digital-first creators and artists in Asia Pacific who are serious about incorporating NFTs into their business. Learn more about the program here

🤝🏻 ITC Asia is back with an in-person event at Singapore Suntec Convention & Exhibition Centre from 7 – 9 June 2022. The 3-day event will showcase new innovations, share how to increase productivity and reduce costs, and ultimately aim to enrich the lives of policyholders. Learn more about the event here.

💹 Stand with Ukraine by working with some of their best design and dev teams on your upcoming projects. In a situation that feels bigger than all of us this is an opportunity to support other professionals and their families, where in some cases they may be forced to live on a single income. Visit here to know more.

🧾 Join Accounting Business Expo: 1000s of accounting and finance professionals will unite at the ICC in Sydney to learn how new digital accounting technologies will boost their efficiency, effectiveness and profitability – 28 – 29 April. Register here

💰 FinTech’s biggest conversation, Money20/20 Europe is back to Amsterdam this 7 – 9 June 2022 – place where the fintech community loves to do business and this year it’s bigger, sharper and giving unparalleled show experiences. Visit here to know more and register. Discount code – FIN200

🤝🏻 FinTech Australia in association with Austrade are hosting a webinar on 26 April looking at fintech opportunities in the European market. Join the panel to know more about market trends and challenges. Visit here to register

🤝🏻 FinTech Australia and Austrade are pleased to present a webinar looking at UAE Fintech Opportunities. Tune into the webinar targeting Australian companies interested in the Middle East market – 26 April. Visit here for more info

Don’t miss all the news and insights from our members and corporate partners from our newsroom.

  • TreviPay announced its entrance into the corporate accommodations market, with its embedded payments solution being deployed first for Choice Hotels
  • Archa has raised $4m in funding and secured a $20m debt facility to accelerate our growth
  • Arctic Intelligence have produced their 2022 insights survey to gather data from financial crime risk and compliance professionals across the globe
  • Sherlok appoints Steph George as CMO as startup sets its eyes on scaling
  • Temenos has been named a leader in The Forrester Wave™: Digital Wealth Management Platforms (DWMP) for Q1 2022.
  • CreditorWatch has released its Business Risk Index (BRI) that has revealed that Australian business activity may be finally showing some green shoots around recovery

Trade activity rises but inflation and rate rises to drag; Hospitality default risk surges

CreditorWatch Business Risk Index (BRI) has revealed that Australian business activity may be finally showing some green shoots around recovery, with B2B trade activity increasing for a second month in a row – now up 55 per cent on its January low (but still down 35 percent year-on-year). This was backed up by positive data on credit enquiries, which were up 45 per cent over the last quarter.

On the downside, B2B trade payment defaults and court actions also continued to rise in March, signalling an increase in business insolvencies in the short to medium term. The Business Risk Index national default rate was up marginally to 5.8 percent, from 5.7 per cent in February, however this is forecast to continue to rise across 2022.

CreditorWatch maintains its view that the economic outlook for Australia will be bumpy due to multiple impacts including COVID-related supply chain disruptions, increasing inflation, impending interest rate rises, labour shortages, fuel price rises and the impact of the east-coast floods. Inflation and rate rises, in particular, are likely to drag on consumer confidence.

Key Business Risk Index insights for March:

  • Trade receivables and credit enquiries up, indicating the economy may have reached a turning point for trade activity.
  • Multiple adverse impacts will likely temper this positive data over the coming months.
  • The Business Risk Index national default rate was up marginally to 5.8 percent, from 5.7 per cent in February, however CreditorWatch forecasts a continued rise across 2022.
  • Credit enquiries were at 219,428 for March – the highest monthly number since July 2021 and second highest since March last year.
  • Court actions were at their highest point since March 2021 indicating that enforcements and collection activities are returning to normal levels.
  • Trade payment defaults are at their equal highest point since October 2020, another leading indicator of rising insolvencies.
  • The probability of default for the hospitality industry jumped from 6.7 per cent to 7.2 per cent from February to March. Arts and Recreation and Transport have also deteriorated.
  • Trade payment default rates in the Lismore region have increased from February to March but remain well below the national average.
  • The net result of the CreditorWatch Business Risk Index and our broader credit indicators is that the economic outlook is bumpy, with multiple negative impacts conspiring to drag on growth.

CreditorWatch CEO Patrick Coghlan says that while the increase in trade receivables and credit enquiries are very encouraging signs, the rises in trade payment defaults and court actions were of concern.

“It’s great to see some signs of recovery, and like the rest of the business community, I truly hope this can be sustained. However, I remain cautious about the timeframe for trade activity to return to pre-COVID levels. There is still so much uncertainty out there, and with inflation on the rise and interest rate increases looming, consumers may be reluctant to open their wallets too much.”

According to CreditorWatch Chief Economist Anneke Thompson, inflation is the key threat to Australia’s economic outlook.

“Notably, inflation is rising because of supply side issues – supply chain bottlenecks, high fuel prices, New South Wales/Queensland floods and staffing shortages – rather than particularly high demand,” she says.

“This is important as future cash rate rises, while looking increasingly necessary to keep inflation within the target band, are more effective at targeting the demand side, by cooling consumers and investors’ appetite for borrowing. Indeed, the RBA will be very wary of cash rate rises further fuelling supply side price rises, if businesses on thin margins choose to pass on higher borrowing costs to consumers.

She adds that given the market is already pricing in cash rate rises, consumers have responded.

“The Westpac Consumer Sentiment Index has been in decline since November 2021. While the index is not low by historic measures, the decline certainly gives us reason to believe that consumers and businesses are already factoring in cost rises and future interest rate rises in their purchasing decisions.”

Source: Westpac Consumer Sentiment Index


Defaults surge in hospitality industry

The probability of default in the Hospitality industry leapt from 6.7 per cent to 7.2 per cent from February to March due to a perfect storm of self-imposed lockdowns among consumers, ongoing staff shortages due to COVID and rises in the cost of inputs due to supply chain shortages and fuel price increases.

Given that hospitality spend is viewed as discretionary spending, it is expected to suffer further when rising inflation and interest rates prompt consumers to tighten their belts. Interest rate increases may also force some smaller landlords to raise commercial rents, bringing further pressure to bear on hospitality businesses.

The Arts and Recreation and Transport industries both saw their probability of default increase by 0.3 per cent, moving into second and third highest risk industry rankings respectively.

 Source: CreditorWatch RiskScore Credit Rating Average Probability of Default by Industry


Default rates rise in flood-affected Lismore region

The March Business Risk Index data shows, not surprisingly, that trade payment default rates in the flood-affected Lismore region are on the rise. However, the rate remains well below the national average.

CreditorWatch expects that the true picture around defaults will be clouded by the banks and ATO, quite rightly, taking a ‘hands off’ approach to payment collections to assist businesses to recover. However, we expect defaults to rise considerably once collections resume, non-insured businesses are forced to close, and others are unable to bounce back after being deprived of income for so long.

Source: CreditorWatch Business Risk Index

Source: CreditorWatch Business Risk Index


Probability of default by region

The five regions at least risk of default over the next 12 months are:

  1. Wheat Belt – South (WA): 3.48 per cent
  2. Glenelg – Southern Grampians (SA): 3.56 per cent
  3. Mid North (SA): 3.67 per cent
  4. Murray River – Swan Hill (VIC): 3.70 per cent
  5. Esperance (WA): 3.71 per cent

The five regions most at risk of default over the next 12 months are:

  1. Bringelly – Green Valley (NSW): 7.83 per cent
  2. Merrylands – Guildford (NSW): 7.80 per cent
  3. Gold Coast – North (QLD): 7.67 per cent
  4. Canterbury (NSW): 7.57 per cent
  5. Surfers Paradise (QLD): 7.47 per cent

Probability of default by industry

The industries with the highest probability of default over the next 12 months are: 

  1. Food & Beverage Services: 7.2 per cent
  2. Arts and Recreation Services: 4.9 per cent
  3. Transport, Postal and Warehousing: 4.8 per cent

The Business Risk Index highlights that those industries exposed to discretionary spending and fuel costs have seen their risk of default increase quite significantly. Any sector where consumers can substitute their purchasing choice – e.g., eating meals at home instead of eating out, watching movies at home instead of going to the cinema – is at increased risk in this inflationary environment.

The transport sector is obviously exposed to rising fuel prices, and those businesses that can’t immediately pass on cost rises will have seen their margins deteriorate significantly in the past few months.

The industries with the lowest probability of default over the next 12 months are: 

  1. Health Care and Social Assistance: 3.3 per cent
  2. Agriculture, Forestry and Fishing: 3.6 per cent
  3. Manufacturing: 3.7 per cent

In an inflationary environment, there are sectors that are relatively immune to strong drops in demand. While supply side cost rises impact all industries in the country, the ones at lowest probability of default have virtually no substitutes. People still need health care, farms still need to produce food etc.

Manufacturing is one of the sectors in the early stages of what might be significant structural change in Australia. After two years of dealing with COVID and border closures, as well as a significant deterioration in the global geopolitical environment, onshore manufacturing has made a recovery. While manufacturing locally is often more expensive than alternative markets like China and Vietnam, the risk of moving product globally is such that the benefit of lower offshore cost has almost been wiped out in some parts of the manufacturing sector, hence why the Business Risk Index is showing more confidence in manufacturers.


Outlook

The overall outlook for Australian businesses is looking quite challenging. Businesses will need to be focused on cost pressures and maintaining margins, while also ensuring that they can induce demand for their products and services as consumers tighten their belts. It won’t be easy.

More open borders may help to alleviate staffing pressures, but an impending decision by the Fair Work Commission on the minimum wage from July 1, 2022, will partly set the scene on what wage pressures businesses will be under going forward.

Add to this cash rate increases – likely around mid-year – and we have conditions set to see continued inflation. For many Australians, this will be their first experience of dealing with inflation and rising home loan rates, so the threat to consumer and business confidence could be quite dramatic.


Contacts

Mitchy Koper

GM Communications and Marketing, CreditorWatch

mitchy.koper@creditorwatch.com.au

0417 771 778

Michael Pollack

Head of Content, CreditorWatch

michael.pollack@creditorwatch.com.au

0422 513 258


ABOUT THE BUSINESS RISK INDEX

The Business Risk Index is a predictive economic indicator to help guide businesses when making future growth plans and inform public policy. It is a new credit rating that ranks more than 300 Australian geographies by relative insolvency risk, providing unique insights into the health of Australian businesses by region.

Each region is ranked from best to worst in terms of the potential for businesses in it to become insolvent. The index can also measure the potential for insolvency risk at a national, state and individual business level.

Regions are ranked on a scale from zero to 100, where 100 represents the best credit quality regions, that is, the lowest risk of insolvency, and zero represents the weakest credit quality regions, that is, the highest insolvency risk.

The index is calibrated by data from approximately 1.1 million ASIC-registered, credit-active businesses. It combines these insights with CreditorWatch’s proprietary data, previously published as the monthly Business Risk Review.

Subscribe to the Business Risk Index to be the first to receive our monthly updates.

Choice Hotels announced as first hotel chain to make corporate travel more flexible by allowing companies to pay on terms with consolidated billing

Global financial technology company TreviPay today announced its entrance into the corporate accommodations market, with its embedded payments solution being deployed first for Choice Hotels International Inc., one of the largest lodging franchisors in the world. To bring greater simplicity, flexibility and financial management support to business travel, TreviPay’s solution allows companies booking corporate travel with Choice Hotels to select an invoicing option, so travelers no longer have to present a physical card for payment and the company receives consolidated invoices for all travelers.

According to the latest Global Business Travel Association’s forecast, business travel spending worldwide will likely jump more than 38 percent this year as the industry continues its rebound from pandemic travel restrictions/preferences. The opportunity to offer expense management capabilities is expected to attract time-strapped business travelers and alleviate companies from distributing and managing employee card programs.

“Bringing innovation and payment expertise to the hospitality industry is an important step for the B2B industry,” said Brandon Spear, CEO of TreviPay. “Corporate clients of participating hotel chains will be relieved of time-consuming invoice tracking and expense management with consolidated hospitality billing, enabling them to focus on other business growth and development areas as business travel rebounds.”

With companies spending more than $111.7 billion on business travel every year,TreviPay provides hotel chains with a dedicated financial relationship and expense management through consolidated billing for B2B buyers to help attract corporate travel clients and build loyalty. Choice Hotel’s corporate clients can now reserve hotel stays and checkout without a physical payment card, as all stays by employees will be invoiced directly back to the company.

“Choice Hotels has always made it our business to make corporate travel easy,” said Abhijit Patel, vice president, marketing and distribution strategy and operations, Choice Hotels. “TreviPay’s direct billing solution was simple and fast to integrate and allows us to better serve our corporate clients while also protecting our franchisees from the risk of extending credit.”


About Choice Hotels®
Choice Hotels International, Inc. is one of the largest lodging franchisors in the world. With more than 7,100 hotels, representing over 600,000 rooms, in 35 countries and territories (as of September 30, 2021), the Choice® family of hotel brands provides business and leisure travelers with a range of high-quality lodging options from limited service to full-service hotels in the upscale, midscale, extended-stay and economy segments. The award-winning Choice Privileges® loyalty program offers members benefits ranging from everyday rewards to exceptional experiences. For more information, visit www.choicehotels.com.

We’ve raised $4m in funding and secured a $20m debt facility to accelerate our growth

We’re excited to announce that we’ve raised a new $4m funding round, together with a $20m debt funding facility. We’ve been incredibly fortunate to receive backing from an enviable list of experienced investors and founders, including CEO and Founder of Wisr, Anthony Nantes, Alex Vynokur of Apex Capital and Betashares, Adam Jacobs, Co-Founder of The Iconic and Hatch, and former Macquarie Capital executives John Prendiville and Link Chairman. The round also included both Founders of Netspace, Stuart Marburg and Richard Preen, and a list of high-profile family offices. We’re super grateful for the backing we’ve received from such a fantastic list.

On the debt side, we’re welcoming Roadnight Capital as our key funding partner, having agreed a $20m institutional debt funding facility to accelerate our growth. We’re so excited to have a partner like Roadnight onboard, given their credentials and strong pedigree working with fintech businesses in Australia. Ultimately, working closely with Roadnight will allow us to grow faster, and more efficiently. Together, we’ll be able to serve substantially more customers.

The fundraise and debt facility is a huge milestone for Archa, but also serves a great chance to stand back and appreciate how far we’ve come. Today, we’re lucky to count high-growth businesses like Sherlock, WeFund & Law Squared as our customers. Collectively across our base, we process over $600,000 in transactions each month (growing rapidly), and new customer growth is increasing 30% month-on-month.

Our solution has opened the door to business owners who can’t (or don’t want to) access a corporate credit card through their bank, and for high-growth businesses unable to offer corporate cards to their teams. This is why we exist and continue to work tirelessly to help businesses that need an alternative and better way to manage their business spend.

Our product delivery is also gaining some real momentum. Already this year, we’ve launched a Xero bank feed integration, which is the first of its kind for an Australian non-bank business credit card. We’ve also increased visibility for primary cardholders, who can now view all secondary card transactions from within their app.

However, this is, of course, just the start for us. With our official launch right around the corner, this new funding allows us to materially accelerate our hiring, invest more in our growth and speed up our feature delivery over the next 6-12 months. This will include richer expense management features, a desktop portal and much more.

I’m super proud of our team for all the hard work and late nights they’ve put in to get us to where we are today. None of this could happen without them, or our loyal customers and partners, who have provided invaluable feedback, recommended us to their peers, and been big supporters of us in general.

We have big ambitions for the next 12 months. Fundamentally though: we want to help thousands of businesses around Australia (and elsewhere) manage their team spend and grow faster. We’re looking forward to doing just that.

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