Navigating Economic Uncertainty: Tech Solutions for Financial Operations – [FULL INTERVIEW]

0:02
So hi, everyone, I’m here with Billie Holliday today. He’s from Invevo. He’s the chief product officer and co founder. And you guys are in the the accounts receivable space and the current receivable technology space. So it’s a very thanks very much for joining me today.

0:17
And certainly, Chris.

0:18
So I suppose I wanted to start off first off talking about about maybe some of the things that you’re seeing with your clients in the cash receivables space, especially as we’re looking into the face of what is seeming like an economic downturn?

0:34
Absolutely, I think what we’re seeing across the board is very much risk mitigation. I know it’s a cliche phrase, but cash has always been king. And it’s been something that’s been very prevalent in the current macro economic climate. But what we’re seeing now is our customers and our prospects are very much looking towards how to mitigate risk. And do they have the appropriate data to help make those kind of risk mitigation decisions?

1:01
Yeah. And so have you started to see like arrears levels going through? I think the insolvencies were bubbling a little bit a while back, I think, in certain sectors when I was looking at it, but as that started, is that economic stress, particularly increasing interest rates started to flow through to the business sectors. Yeah.

1:17
Yeah, we’ve started to see it flow through. Absolutely, I think there is a lot more, kind of, we’re seeing more default, I’m also seeing more focus upon alerting and an early warning sign is because there was a lot of risk around a default. And a lot of our customers create liquidity through trade credit. So they’re trying to make sure that they have the controls in place to say, Okay, are we giving credit to the customers with the appropriate kind of risk levels? And are we meeting gets those NCT falls? Yeah,

1:51
and is that sector dependent? So do you think sort of different sectors struggling more than others? So I’m thinking, for example, the restaurant trade, or maybe building might be suffering, or may suffer more as a result of interest rate increases than, say, other sectors? Is it sector specific or?

2:07
For us, we are sector agnostic. So we touch a lot of different sectors from building supplies, recruitment, pharmaceuticals, estate management, so we do see trends within those sectors. I would say that the certainly some sectors are more affected than others. You touched on a couple there, obviously, the restaurant trade, building supplies and construction are certainly seeing a slowdown, and also higher levels of age, debt and, and defaults. I do think that certain sectors are now looking to where they’ve had some glory days, so to speak, they’re now making sure that they have the right controls the right technology, more real time data to react to the current economic climate, for sure.

2:49
And I suppose contrasting it with the consumer world versus the corporate world, you want to start with some of the things that people are looking at in terms of looking at around things like DSO or increasing speed of payment, those kinds of things? And what are some of the early warning signs that you would like flat out?

3:03
So it’s a lot of it’s data driven? So it’s having the insights? It’s Do you have the right technology? Firstly, to be able to consume the right data? And do you have the ability to create the necessary actions? Real Time Data is on the lips of everyone we speak to it’s about do we have the real time information is that credit information is that payment behaviour is that propensity to pay, all of this key information is needs to be consumed in real time to make the appropriate trigger or action. So that’s what we’re seeing that people are really looking at, do they have the right insights to make the right decisions?

3:41
What’s your sort of assessment of the current state of evolution as you go into the market people relative sophisticated, who just layering additional sophistication on top? Or is that there’s quite a big opportunity out there?

3:54
I would say there’s a big opportunity to say that the level of sophistication is not as high as I would have liked to seen the number of customers that still have prospects that still use Excel. There’s definitely a technology gap there. But that’s where we’re excited in terms of where we’re positioned. But I do think there’s now a big push to overlay the right technology, because like I say, the insights are key right now. And the only way you’re going to gain those insights is with the right technology.

4:21
Do you think that reliance on Excel? Is that size of company thing? Or is it a length of trading kind of thing? That I mean, because we all deal with legacy systems? They’ve

4:30
been around forever, you know, something that worked at one point of time doesn’t necessarily work. What’s What do you think the driver is that XL seems to be just homely in all of our business processes? We can’t Yeah.

4:42
Yeah, it’s quite mind blowing. I do think it’s that there’s lots of contributing factors. They think culture is a part of it. Terms of a lot of businesses in the last 10 years have focused very much on top line, drive technology in sales and revenue generation and account To see who had been historically left behind a little bit from a technology perspective, and now it’s become a focal point, how can we improve these key metrics? How can we improve our working cat, our cash flow? And I think there’s a, an understanding and acceptance that they need to embrace technology, because there are a lot of legacy practice and legacy technology. So I think it’s an educational piece, as well as a technology piece and great technology out there. But it’s making sure that you can change that kind of culture to to embrace that, that technology, there’s, there are plenty of credit teams that maybe are adopt quite legacy processes. So there’s that change in mindset that needs to happen as well,

5:43
who’s probably a lot of credit teams that are exhale, wizards. They built all sorts of things in an exhale, but I suppose it’s just whether it’s the right tool for kind of the job and where we sit now. What about investment, though, for the credit teams? I mean, is that starting to ease up a bit in terms of people getting a little bit more funds for investment? Because you are, you make the point there around? A lot of it’s gone to the front end? And it feels like sometimes it feels like that back end process? Feels like it’s a bit of the poor cousin sometimes. But are you seeing that kind of change? And what do you think will change? What’s your outlook for that going forward?

6:14
Absolutely. Is it we’re very pleased to see a shift in mindset there in terms of investment into the back office function and the accounts receivable function in particular, I think, what will change there is purely business metrics. People are now focusing more on on those accounts receivable, metrics, DSO, the key metrics that and you got to think about it as well, a lot of these large businesses, enterprise business, what sits behind them, these lenders, P houses. And again, there should be a shift in profitability and things that were important to them is meaning that there’s an increased focus on the accounts receivable function.

6:57
And how quickly do you think you can turn it around? And if people got when people got pressure from increasing interest rates on loans, corporate loans, there’s going to be some pressure to try and turn that around, generate additional cash flow coming through the business, what are your timeframes of turning it round? And I suppose if I was to put you on the spot and say, what are the top five things people should be looking at? In addition to looking for a new system?

7:20
Yeah, I think timeframe is really about to take note of user says Select not here to draw more around technology, but other technologies have. The data structure enables them to configure and deploy system more rapid than others, or timeframes. You need to take that certainly into consideration when you’re looking at it. It availability, again, can you get assisted in quickly? Can you get it up and running? Can you start generating a return on investment at pace? So I think that’s really important. Top five things, in terms of when you pose that question, again, it in terms of what businesses should be thinking about that the question? Yeah, so

8:00
if I got a challenge in terms of DSO or free cash flow, as you go into businesses, what do you think? Are the top five focus areas to really look at first? Or what are the top five areas where you can drive benefits the fastest?

8:13
Absolutely, segmentation is a huge thing. When we go into businesses process design to create a more bespoke Truman strategy when you’re talking about how do we collect cash faster? A lot of these legacy businesses that work on Excel don’t have the ability to have more than three or four workflows and collection strategies. So creating process design about how do I segment my customer base to make an more effective collection strategy tailored to that customer bases is absolutely something we think is a quick win. How do I create automation quickly too? So that there’s two areas that I’d be focusing on is my users and my customers? How can I make my users more productive? And how can I make it easier for my customers to pay me and, and improve my customer digital relationship with my customer? So user adoption is about having a tool that’s very easy to navigate, very easy to use, creating automation that’s going to remove that highly manual activity so they can focus on the core business tasks, speaking to the customers, when it comes to the customer experience is, have you embraced the latest technology to enable more mature payment types? Have you got open banking within your facilities? Can my customer self serve? So if you’re really focusing on your users and that user journey to increase productivity alongside am I focusing on my customer journey? I think they’re two really key areas that will drive rapid ROI and a great business case for as to why you need to adopt new technology.

9:46
And I suppose a lot of the time when you’re talking about b2b collections, and particularly talking to account managers, rather than necessarily individuals. I mean, how do you think the collections process needs to change as a result of that? And what extra sort of functionality do you need to have to really talk with account managers because it’s not necessarily their that is the company they work for is that putting, like smaller or sole traders to one side for a second.

10:12
It’s about again, having the appropriate technology to sit in between that. So subsets it can face, ERP so that they act as a middleware. So an ERP can talk to an ERP gain is having the right self service capability. So it’s easy for a customer to respond to communicate, whether that’s disputing an invoice promising to pay requesting a repayment plan. It’s the you have this suite of tools at your disposal to make it easy to communicate with that customer. Yeah.

10:41
And digital in all of our lives, digital communication, digital contacts become a big thing, particularly in our personal lives. From our consumer point of view. Is that starting to, to come across into the business world as Why would people rather do things digitally for looking at an account manager? Someone’s in the receivable function? Or the accounts payable function? Would they be? Is that digital interaction just as important? It is on the consumer side?

11:07
Absolutely. I think having that digital communication between yourself and your portfolio of customers, is incredibly important. And it’s, it’s an ever moving piece, right? It’s been at the forefront of the digital channels, we’ve seen a big push from a number of our customers and prospects for open banking data, b2b and open banking, that data, b2c can create huge benefits for both the business and the end customer. And in terms of visibility of spending, availability to trade credit, open banking payments, as well. So adopting the latest digital channels, I think is really important. And like I say, staying on the forefront of those.

11:49
Yeah, and I suppose things like emails, it’s probably got a slightly higher visibility than say, text would have all those texts will be so important for some segments, particularly when you go out smaller companies, I would

12:01
imagine, absolutely. Email is still the primary channel for sending out communication with customers. But again, it’s making sure that you have all of the channels available. So you may have a proportion of your customer base that respond far better to SMS than email, because they’re picking up those SMS, they’re clicking on a link, and they’re making a payment. But it’s having that ability to have a bespoke treatment strategy. And say this customer type might prefer SMS, this customer to this contact type might prefer email. And do you have the flexibility and the level of controls in your automation to make sure the right communication is going through the right method at the right time.

12:44
One of the things that definitely very prevalent these days is time, and I’m talking about sort of time in the work day. And a lot of employees, a lot of us don’t seem that the time seems to evaporate throughout the day. How do you think that we deal with that automation is obviously one part of that, but are you seeing those kinds of similar kinds of issues with people where they’re just too busy doing stuff to actually get to the stuff they need to do? Is that? And is that becoming an increasingly pressing issue or not?

13:10
Absolutely think it’s an issue, I think when you’re looking at the credit control function, that can’t that’s all about prioritisation of work, and making sure that that the key tasks are being created and allocated to the right people. So productivity can be impacted by a lot of admin work. So that can be automated, that can increase the sort of man hours to go on the phone. So it’s about having the controls to make sure I can prioritise my team’s work, I can make sure that I take away a lot of the low hanging fruit, which is the highly administrative work so that they can focus on those key tasks. So that’s what I say is the main thing. Yes, we do. Like you’re saying, we are seeing people struggling for time throughout the day, and they want to have the control to see and monitoring, being being having that awareness of how many tasks people are completing how much time they spend on the phone, having that reporting metrics, it comes far easier to sit down with a team member and look at product productivity when you’ve got the data to support it.

14:16
We talked a little bit about digital and digital interactions think Do you think the KPIs or the you talked about reporting just there, do you think they’re going to need to change as a result of this new sort of digital infrastructure and we need to start thinking about the way we were the way we measure collections differently as a result of it, essentially going digital getting more automated,

14:36
obviously the big I don’t think we necessarily need to change. I think there has people have had to react. A prime example of this obviously, with COVID big teams or collectors or went remote. Businesses who weren’t set up for success were had collectors working from spreadsheets at home on their own mobiles. There was complete lack of visibility in terms of one how much work they We’re getting through the productivity of those kind of remote users, and what their key focus was. So people have adopted technology to enable that kind of hybrid workforce. That in terms of the KPIs and what they’re focusing on, I think accounts receivables is very much. How much have I collected? What Where is my age debt? What are my age debt buckets? What am I prioritising, but there are some metrics that that are being looked at in more focus in terms of level of disputes my time to resolve disputes. And again, it’s making sure you’ve got the controls to to measure this and and the systems in place to help you resolve that. Yeah.

15:38
When a lot changed the remote working, where we used to have people in the office, you could see what everyone’s doing, you could talk with each other, now actually much more just disparate? Are you seeing people’s coming back to the office? Or is that you’re still seeing that this remote working still needs to be facilitated. And so you have to reflect on some of your reporting as well.

15:57
Absolutely. You We are pleased to see I’m a bit old school that I like to see a one collaborate together as a team in an office and we are seeing a move back to to the office. But there’s definitely a acknowledgement that there has to be that flexibility. I think businesses understand that to create that sort of work life balance, you have to have a hybrid approach. But we’ve definitely seen collection teams moving back into the office, like you say, you have to have adapted to say, Can I measure my remote workers in the same way that I can measure? Someone sitting beside me is making sure you’ve got the controls in place to do that.

16:34
We talked about remote work and given that we’re both remote right right now. So it definitely has benefits, isn’t it in terms of quick video calls and those kinds of things. But I suppose it’s that balance around whether you’re spending time that collaborative time talking with each other. But you’re seeing businesses starting to think about at least in the b2b space, like it’s time to come back in the office at least four days a week or even full time. Is that the theme you’re hearing?

16:59
Yeah, we’re definitely seeing that. I think full time not in many cases, because I think they’ve there’s been a bit of acknowledgment that the workforce is created a work life balance, and they’re seeing high productivity levels. But yes, certainly four days a week we’ve seen in a number of businesses we work with,

17:20
yes, the world didn’t fall apart by us going remote business still got done. I suppose it’s there’s there’s always that balance there isn’t there? And I suppose as you start thinking about you talked a bit about investment and get it and getting investment. If you’re standing there in front of the CFO, what are the arguments she’s like, best making in terms of to try and get that investment. And this is how it changed. Because sometimes that can be a bit of a battle in terms of getting that over the hurdle to say, actually, arrears haven’t gone up yet, but we need to do it now. Because if we don’t do it, then that can be a problem in the future.

17:50
Absolutely. So this building the business case, from a kind of financial perspective, which is often the case in terms of how can I reduce my costs by implementing the right technology? How can I improve my working capital by implementing the right technology? And there’s an element of how can I future proof my business? How can I embrace the latest technology to make sure that I’m future proofing for growth for acquisition, for agility? Really, if I need to scale up scale down? Do I necessarily want to be adding four or five FTAs, where I can actually create automation through technology to get through the same amount of work with my current team? So it’s very much the three kind of areas of cost reduction, working cap improvement and future proofing, I’d say that are the areas we speak to financial directors with.

18:40
And we look at collections teams, and they typically seem to be a little bit smaller on the b2b side when you seem to have larger ticket items but slightly lower volume. What about interactions with business process outsourcers DCA is that sale? Those kinds of things? Is that the still as keen as they are, as they used to be around doing that? Or is it now typically more done in house. And so using technologies build the capability in house rather than using third parties?

19:03
We see a mix really, what we see is what people are looking for is at that point of outsourcing to a third party to litigation to DCA, what they’re striving for is to have improved visibility. So having a system that seamlessly integrates with the DCA. So at this point of the debt journey, my internal team have worked on it to a certain stage. It triggers it being passed to an outsourced third party. And that data is coming back in. So I’ve got visibility of where it’s going. So that’s the evolution we’ve seen is a much more seamless approach. Are they trying to do more with their internal team? I believe so. Yes, because you can take them further down the journey with the white piece of technology, but I do state that there will always be a need for third party in terms of legal DCAA. At some point in the journey, it may be reducing the amount that’s passed out to third party which again is a cost saving thing, and having better visibility of that, I think is really important.

20:04
And I suppose part of that is like, how do you move the collections upstream? So you get that cash flow benefit if you’re getting the DSO benefit, which means that what then does flow downstream is a lot less, isn’t it?

20:15
Yeah, that’s just the tail. Yeah.

20:20
Okay. And so if we look at the future, what’s your view around? What’s going to happen? We’re sitting here today, they were just talking about further interest rate increases, maybe it’s tailing off a little bit looking at the inflation rate, maybe the inflation rate is softening a little bit, which is great news. What’s your kind of view for the future? Sort of, economically? Where do we think we sit? Because it feels like things should be a lot worse than they appear to feel at the moment, at least generally. But we there’s a lot of bad news out there. I mean, where do you think we’re gonna go from here? What do you think’s gonna happen?

20:52
Yeah, I mean, there’s this there’s a lot of doom and gloom in terms of it’s coming. And the knock on effect of sustained high interest rates is clearly going to have an impact on businesses. We’re not seeing the big doom and gloom yet, we’re not seeing that filter through to huge amounts of defaults. There’s a lot of people I’m speaking regularly in the space, you talk about those third party litigators in the show, that seem to think that that the number of work they’re seeing is increasing, and they feel that they feel that only going to increase that we’ve seen this many times is quite cyclical. And people talk about doom and gloom, but does it come? So it’s hard in terms of the trends? I see I just I do see that people are going to be looking, looking just to have much more real time, insights people do you need to be a lot more reactive? I think that’s the thing that’s really important is, you don’t know. People don’t know what the knock on effects a bit. One’s predicting. doom and gloom, but they need to be able to react to that. Why increased levels of trade credit to reduce levels of trade credit, do I accelerate my collection strategy? They have to be able to react quickly? I think the fundamentals

22:07
are as you just don’t go to the collections department or even the credit risk function, expecting an optimistic picture because our job is to to really highlight the risks that might actually happen. So we’re almost like, we were employed to be doom and gloom stirs. I think is, rather than the optimist. I’m not sure if that does us any favours in the long term, but I suppose it’s around mitigating risks, isn’t it?

22:32
Yeah. And from a technology standpoint, where you say, Where’s the future? I think people are really now looking at what can we do to start creating predictability alerts. So we as a business are are overlaying AI, a lot of other businesses are looking at AI to where can I create more predictability? So I can have early warning signs and reduce risk? And also identify root cause analysis of, of issues earlier through through the adoption of AI? From a technology perspective? Where do I see the future I see it, definitely looking at the likes of AI to make better decisions early.

23:09
One of the things that kind of concerns me is we’ve been in this stable environment, the last little 3040 50 years, which has been relatively predictable, or with a particular macro kinda level, and it feels like it’s, we’ve been knocked off balance a little bit, particularly with the pandemic, and like some of the things that used to be taken as, as accepted norms before, doesn’t feel like those things are quite the same. So it was like the models need rejigging quick, more than they would before the slightly different cuts and segmentations. And what before, and I suppose it’s just like, how do we best adapt to that? And I suppose react to that. That’s where you’re seeing AI as being a potential area in terms of I mean, do you think there are going to be new segments?

23:47
Yeah, absolutely. I do. And that word used areas React is the agility. I think people don’t know what’s coming. But am I prepared for an agile enough as a business to react to change, I think is the key. So I think that’s something that everyone is monitoring constantly say, what is the change? What is the macroeconomic outlook? How are we going to react to that, whether that be banks, businesses, enterprises? How can I change to current climates? Because we’re talking today, and I think that the economic climate will look very different in 12 months time.

24:24
Yeah. One thing we didn’t talk about was, how much API’s have changed the industry to a certain extent, you talked about integration between systems or integration between providers? Where do we currently sit with them to like API integration? And so like, how much is that changing? And how much further we got to do? Have we got to go in terms of integration of different platforms, really, across the customer lifecycle? I know we’ve made progress, but when what do you think the current state of play is?

24:48
Yeah, I think that’s constantly improving. I think when we look at deploying technology, we always look for a player API first, for that real time connectivity. That’ll be transparent And in some cases where it’s difficult to connect up to a third party, we sometimes use flat file just for kind of speed of deploying software. But yeah, I think API’s and connectivity to API’s are becoming easier. And that will continue to become easier. And there’ll be more and more out of the box. connectivities is definitely the way things are going. Yeah, we’re happy with the way the outlook in that regard in terms of real time nature of getting access to data.

25:27
I remember the days when SFTP was like the cutting edge of being able to actually share information between computers was like that was it and you think about where we’ve gone from here? And I suppose yet linking that through, which is an enabler for AI, isn’t it as well, because you can actually share the information you can share it more detailed information at work? What do you think some of the use cases that you’re looking at, from an AI point of view, if we’re looking at in five years time, what will be the case studies will say, look, looking back on this is the places where it can best be used.

25:57
Yeah, from our perspective, obviously, we’re very much focused on the accounts receivable lifecycle, and what and how we can overlay AI into our tech stack. And the use cases we see is recommended treatment strategies. So you may have a customer that is on a certain treatment path. But an AI recommends that you pivot and because of some data that it’s consumed, whether that be an alert from a credit, Bureau, or changing payment behaviour, the AI recommends an immediate change in treatment strategy. Again, identifying blockers is something we’re looking at. So if something’s going along a path, and you can see that the time taken to complete certain action is increasing the AI will will change that strategy. So we’re keeping it very much to our workflow engine, how do we overlay it to that to improve that connect that sort of communication with the customer, and Recommendations is a big thing. I’m an agent, I’m a collector, the AI would recommend this is the action I should take. So it’s not always about workflow automation is about how can I recommend the correct actions my agent or collector to take? Yeah,

27:12
I know sometimes we get very excited about new technology that comes along. And it’s actually takes a little bit longer for it to to actually mature into tech into the financial services. Well, but I do think it’s quite interesting what’s going on at the moment. Everyone’s been talking about having late. So

27:25
yes, the audit is the audit stability of AI, which is I think, being the blocker and why we’ve been dipping our toe in and making sure that we’re very comfortable that you can audit the AI. Because the types of businesses that we deal with, they need to be very comfortable that they can audit a decision that was made by the AI engine.

27:45
Yeah, yeah. Yeah. Okay, Billy, thanks very much for making the time. I appreciate it. It’s great to hear about what’s going on in your space and hearing a bit more about the business and the credit control world. Interesting how some of the same themes keep on coming through in terms of like systems automation, and it does feel like a lot of people are starting to invest now for what could be a bit of a bumpy future, at least anyway.

28:07
Absolutely. I really appreciate you inviting me on. Great speak. I’m here to speak shortly. Thanks very much. Take it by now.