One of the more important jobs of the accounts payable professional is keeping up with what is happening in the industry at large. This is critical for a few reasons, including skills development and the hunt for new technologies, but is sometimes difficult to do. That is why, each week, the team at Payables Place collects news stories and announcements on the people, companies, and events that can have the biggest impact on the accounts payable team; this cuts down on the amount of time that the AP professional needs to spend keeping up to date and makes it easier to get back to the task at hand—driving strategic value for the organization.
This week in payables news includes a few developments: the People’s Bank of China has cut interest rates to record lows, Tradeshift and C2FO have inked a new partnership, and Citigroup is working toward launching a “Citicoin” based on blockchain technology for cross-border payments. Read on to find out more about these and all the other impactful news from around the accounts payable world.
China Cuts Interest Rates to a Record Low After Stocks Slump
In a bid to stem the slowdown in its economy, the People’s Bank of China this past week slashed its one-year lending rate to 4.85%—the fourth reduction since November—with the one-year deposit rate dropping to 2% and the reserve ratio for city commercial and rural commercial banks falling by 50 basis points, Bloomberg reported. The cuts come after the biggest two-week fall in the Chinese stock market since December 1996, which signifies a drastic slowing of the economy; a concurrent four-week rise in money-market rates makes it clear that there is some cash hoarding going on.
The PBOC’s move is the latest in a string of monetary easing sweeping the globe. New Zealand and South Korea have both cut benchmark interest rates recently, and the European Central Bank is continuing its stimulus program with great success. China is a critical marketplace for many enterprises, and the cut in interest rates will make it easier for organizations doing business there to borrow money. The PBOC is aiming for this latest cut to do exactly that—stimulate lending—so as to get closer to reaching the central government’s 7% annual growth target. Only time will tell whether they are successful or not.
Tradeshift and C2FO Ink New Working Capital Partnership
Tradeshift and C2FO this week announced a new partnership that makes the C2FO working capital marketplace accessible via an app on the Tradeshift platform. The partnership is designed to expand access to dynamic discounting opportunities for a wider range of suppliers, in recognition of the importance of the financial supply chain. The partnership makes it possible for suppliers already active on the Tradeshift platform to access C2FO’s discounting opportunities through the same portal where invoices are already managed; this cuts down on the number of solutions buyers and suppliers need to log into in order to make a financing decision.
Dynamic discounting can have a significant impact for both buyers and suppliers. Effective discounting options can help the buying organization save money on its invoices, while also offering the possibility for suppliers to get paid earlier and have more reliable access to capital. The combination of Tradeshift’s supplier network functionality and C2FO’s working capital “marketplace” makes this tactic accessible to a wider range of suppliers, and offers C2FO’s solutions to an entirely new crop of customers without the need for additional sales headcount. Overall, this is a good move for both companies—particularly because their solutions complement each other handily.
Codename Citicoin: Banking Giant Built Three Internal Blockchains to Test Bitcoin Technology
Much ink has been spilt lately discussing Bitcoin and other digital currencies as a possible “death knell” for traditional banking, but legacy banks are not taking this possibility lying down. International Business Times UK reported this week that Citigroup experimented internally with not one, but three separate internal blockchain protocols to test the feasibility of Bitcoin-esque digital currency for cross-border payments and transactions linked to mobile phones. IBTimes UK spoke with the head of Citi Innovation Labs, Ken Moore, who explained that Citi had developed three test blockchains protocols—all of which running just within the lab—so they could mine and test what Moore calls a “Citicoin.” The systems are currently at a pre-production level, Moore told IBTimes UK, and there is no money running through them at present.
Cross-border payments are one of the thorniest subjects in the modern business-to-business commerce world. When companies do business with suppliers in another country, they run the risk of having to translate their nation’s currency into the receiver nation’s currency, in addition to the payment needing to jump through multiple regulatory hoops from the country of the buyer and the country of the supplier. If blockchain technology can simplify this process, it could be a game-changer in the world of cross-border transactions. Similarly, there are many developing nations that have a high penetration of mobile phones but significantly lower numbers of people with bank accounts. Linking transactions to mobile phones can smooth B2B commerce along in such places, where cash is currently the default mode of payment.
Barclays Bets on Blockchain and Startups to Re-Invent Finance
Finextra reported last week that the 13-week financial technology accelerator program run by Barclays in London has resulted in seven of the 10 startups forging relationships with the UK bank. Three of the companies that participated in the accelerator in fact already crafted strong working relationships with the bank. Safello plans to look at how the blockchain can be leveraged in the financial sector, Post Quantum is implementing its cybersecurity product at the bank, and Stockfuse will launch its Global Market Insights Game as part of the bank’s graduate recruitment program.
Major banks running programs such as the Barclays one can drive significant technology innovation in the financial space, and could indicate the next solution providers to watch. Safello’s work on the blockchain in particular has the potential to be transformative in the financial sector; digital currency may end up solving several major issues in payments, from cross-border payments down to transaction security.
Nvoicepay to Host Inaugural ‘Nvoicepay Nsights’ 2015 Summit for CFOs in September
Nvoicepay last week announced its first-ever event, Nvoicepay Nsights, to be held this September in St. Helena, Calif. The summit is invitation-only, and intends to examine the key trends that are disrupting the role of the CFO, including cryptocurrencies, B2B payment trends, and supply chain transformation. Event keynotes will be given by executives from Goldman Sachs, Silicon Valley Bank, and Align Commerce.
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