Historically, organizations operating within the transportation and logistics space have been slower to adopt emerging technologies. These industries rely on a complex infrastructure that must be perfectly balanced to maintain business continuity, meaning many business owners and decision-makers adopt the “if it isn’t broken, don’t fix it” approach when it comes to technology and payment processing.
However, when the pandemic peaked in 2020, it spurred businesses throughout the logistics ecosystem to reevaluate their stance on mobile payments for the sake of safety. Covid created a heightened need for quick and convenient financial processes that enable contactless and socially distanced payment transactions.
A global health crisis arguably ushered logistics and supply chain fintech into the mainstream. Today, the advancements in software, hardware, infrastructure and mobile payment technologies are more accessible and affordable than ever before. But as the industry thinks about the future of fintech, the truth is that these solutions have a much wider application than solely meeting challenges brought forward in the last three years.
If you’re a business that didn’t invest in fintech in the last two years but are weighing options for the future of your organization, there are three questions you should ask to determine how fintech can fit into your operations and support revenue goals.
Do I Have a Cashflow Problem?
Cashflow problems happen when a business doesn’t have enough liquid cash to cover its liabilities. When money leaving the business exceeds the money coming into the business, an organization can struggle to pay debts and cover other expenses. Cashflow challenges impact many companies and can stem from low-profit margins, over-investing in inventory or problems invoicing and collecting payments.
If these challenges sound familiar – particularly surrounding invoicing and payment collections – fintech solutions could be a good fit. These technologies support faster payment collection, bringing cash into your business quickly. This faster payment collection can also increase the stability of revenue streams. Once a supply chain or logistics business goes mobile with its payment collection practices, it can start to forecast weekly and monthly revenue more accurately as there will be minimal collection delays.
Steady cash flow to pay your employees, cover expenses and provide a cushion against bumps in the road is critical. Fintech technology not only boosts stability but adds an extra level of security by protecting against chargebacks. If you haven’t prioritized upgrading your payment process for the sake of financial stability, it’s time to bring it to the forefront.
Where Can I Streamline Operations?
For supply chain businesses looking to adopt fintech beyond pandemic-era use cases, the next thing to evaluate is your current operations. Slow operations are often a byproduct of manual processes. When it comes to payments and transactions, streamlining operations looks like shifting away from paper and adopting digital systems. If paper payments bog down your operations, it’s time to consider fintech solutions.
The average B2B paper invoice costs $17 with a 10-day processing period, and the entire lifecycle of a B2B transaction takes a slow 34 days. Just like strong cash flow, efficient operations will make it easier for supply chain businesses to operate effectively. Take a repair and tow business, for example. Processing cards or fleet checks in the field can potentially tie up drivers and staff alike, preventing them from moving on to the customer. It also ties up dispatchers, forcing them to spend their time keying in credit card information instead of taking calls from new customers. It’s also extra work for back-office staff, who often deal with information and spreadsheets manually.
By digitizing payments and investing in fintech, businesses can improve operational efficiency in the warehouse and on the road, making it easier to collect payments, support more payment options, and ensure there isn’t a paper invoice or receipt to keep track of. By embracing digital payments, logistics businesses can reduce reliance on paper, enable real-time mobile payments, and increase ROI.
How Can I Increase Visibility?
Lastly, business owners in the logistics and supply chain space need to determine if they have visibility into all revenue-related activities. Do you have access to a holistic view showing where money is leaving and coming from? Do you have an accurate picture of your business’s data? Are your back-office activities integrated into a unified space?
If this is a challenge you’ve encountered, fintech can be one piece of the visibility puzzle. The innovative technology keeps a digital record of all transaction activities. These credible financial statements equip business owners and operators with a clear picture of the business’s financial health. Additionally, when you have all payment and transaction information available in one view, business owners can more easily make strategic decisions about a business, its priorities, operations and long-term investments.
Fintech’s Supply Chain Future
Fintech went from a “nice to have” to a critical component of business continuity during the pandemic. However, its adoption won’t stop there. For logistics and supply chain businesses looking to revamp revenue efforts, boost operational efficiency and increase visibility, fintech should be a cornerstone in an ongoing strategy that enables logistics partners to work more efficiently with each other. As an industry, we need to think bigger, demand more from our technology, and use it to drive lasting impact.