Cambridge Global Payments is a leading provider of integrated cross-border payment services and risk management solutions. The LTP team interviewed Mark Frey, COO of Cambridge Global Payments, on the Automated Payable Solutions Cambridge offers. Mark shared very interesting insights on the industry trends as well as company's plans and Money 20/20 participation. Here is the transcript of the interview with Mark:
LTP: For some of our readers who may not be familiar with the company, please tell us about Cambridge Global Payments and the services you offer. What is the experience and value you bring to the clients? Also, who are your biggest clients and how fast are you growing?
Mark Frey: Cambridge Global Payments is a leading provider of integrated cross-border payment services and risk management solutions. For over 20 years, we’ve carried the legacy of delivering innovative solutions designed to mitigate foreign exchange exposure and address unique business needs in the world of global payments. As our business has evolved, our clients-first, high-value service model has been bolstered by significant investments in technology focused on streamlining business processes and delivery efficiency for our clients and partners. At this stage, our focus is global and is centered on leveraging technology to provide our corporate clients around the world with direct access to local clearing systems to deliver their business payments as efficiently and cost-effectively as possible.
Based on the growth of our business, the market has certainly endorsed this vision, allowing us to continue to grow our revenues in excess of 35% per year while our customer base of mid-to-large capitalization firms has expanded to include more than 13,000 corporate entities. To that end, our focus remains on providing solutions to regional financial institutions, global law firms, asset managers from across the spectrum, software providers and industrial entities that import input goods or export manufactured product for international sale.
LTP: Please tell us more about the Automated Payable Solutions that you offer. Can you give us an example of one of your clients who you shifted to paperless? How did it affect the operations and costs? Could you share some statistics regarding paperless vs. paper-based payable solutions from your clients’ experience?
MF: The current infrastructure of AP workflows is largely manual in nature, error-prone and labor-intensive. Our process helps businesses reduce costs and increase their return on investment by opting to go paperless through seamless integration with existing AP systems, allowing clients to retain full ownership of all data. Further, our unique vendor management technology and process ensures that we handle all the heavy lifting for the client in terms of building engagement and adoption amongst their vendors. I’ve personally just overseen an implementation by one of the transport industry’s largest leasing providers in Vancouver, where we eliminated more than 80% of the firm’s vendor checks within four months of launching the vendor management campaign and were able to earn a full ROI of the entire solution within six months of signing the contract. In this case in particular, we hit every one of our program milestones on time and have delivered well in excess of the targeted cost savings and economic return.
Our Automated Payables Solution allows organizations to eliminate checks, process all vendor payments regardless of currency or payment type through one single file and achieve potential revenue rebates—all without draining valuable AP resources. What this means is that we are able to guarantee that we will eliminate at least 75% of paper checks to qualified vendors within 90 days and can use the card rebates generated to fund the entire program, typically within the first few months of processing. At the end of our vendor management campaigns, our clients are delivered a solution that not only drastically improves the economics and processing of their domestic and international AP, but they have a process and system that will grow with their business and allow them to build more positive relationships with their vendors along the way.
LTP: What are the challenges related to paperless solutions implementation, if any? How does Cambridge address those challenges?
MF: When we began to look at this business issue, we identified a number of challenges businesses face with traditional processing models as well as some key limitations of existing industry solutions. First, while traditional financial institutions and card processors offered initially compelling economic benefits in terms of switching check payments to card, the overall conversion ratios and extended implementation schedules really diluted the overall value to the client. In short, implementation timelines often extend beyond two years and still, in the end, too few vendors were willing to accept card payments for strategic and high-dollar-volume payments. As we viewed the issue we realized we needed to deliver the following things. First, we need to dramatically improve conversion ratios to electronic payments. And second, we needed to dramatically shorten the implementation cycle without consuming the client’s already stretched AP and technology resources.
In terms of improving overall conversion ratios, we recognized that we needed to provide an ACH backstop to card processing. Simply put, strategic vendors and firms with significant, large-dollar-value payments couldn’t get vendors in these areas to accept card, but a card-first program backed up by ACH capability would indeed offer the economic benefits to our clients associated with card processing rebates while dramatically improving overall rates of adoption and ultimate vendor conversion. We then strengthened our solution in this area by making a few key investments related to building a vendor management technology solution and engagement process that allowed our organization to take ownership of converting vendors to electronic payments, as opposed to the traditional approach of stuffing letters inside envelopes with checks and hiring summer interns to call your master vendor list.
Finally, we added the ability in our vendor management solution to deliver rich remittance information in a number of formats, thereby alleviating the concerns of vendors in terms of their ability to recognize and reconcile the payments they were receiving. In the end, we delivered a technology and a process that made it easy for our clients to undertake such check elimination initiatives while also adding value to vendors who could now manage their own data and that too, much more effectively. These choices not only dramatically improved the client’s overall experience but also had a secondary but still incredibly important value in that they allowed us to dramatically shorten the timeline between project launch and ultimate cost recovery. Bank programs that would historically deliver 50% conversion rates to card after two or more years were now countered by conversion rates in excess of 75% within three months. Thus far, based on our sales and implementation pipeline, I think it is safe to say that our approach has been very successful.
LTP: What are the industry trends and shifts happening in the market with payments and financial services?
MF: Large financial institutions (FI) often follow an international model of doing business that involves a local presence in the markets where they operate. However, this still remains an antiquated way of doing business—requiring physical presence around the globe can be complex, costly and very difficult to respond to changing market conditions or business demands. The shift we’re seeing is in the movement towards delivering the same services electronically, in a more efficient digital platform. What will be key to monitor in the years ahead in this industry will be technology integration across platforms. This shift will play an important role in how companies can respond to not only the growth of the unbanked but also how technology can be leveraged to significantly reduce fees and processing costs for even the most FI-embedded corporate organizations in the world. In short, we expect to not only make financial services more accessible for the underbanked but also dramatically improve real accessibility for multinational corporations to a much more efficient and cost-effective model of supporting their financial and payments needs the world over.
LTP: Do you have any specific milestones for Cambridge that you can share with us? What are the most important steps in the growth of the company?
MF: A key part of our focus in 2016 will be to continue the rollout of our technology platform. This past week, we launched the first phase of our new online payments platform “Cambridge Link,” which delivers significant user enhancements on top of the award-winning capability that was instrumental to the success of its predecessor. A key part of the new platform is improving the user experience with smart payment technology solutions that seamlessly integrate with operational processes and users’ busy lifestyles.
We have an aggressive schedule of system enhancements and product rollouts over the course of the next year along with the release of our mobile app that will put much of the same treasury workstation and payments capability of our system on the devices our customers carry in their pockets. Behind this platform, we’ve created a digital network of global partners that allow us to deliver in-country, domestic payments capability in markets traditionally only accessible through the SWIFT network. Through the combination of technology and key strategic partnerships, we expect to be able to provide direct, local access to payments networks in a manner and in geographies the market simply has not experienced as yet.
LTP: Tell us more about your participation at the Money 20/20 conference and what Cambridge Global Payments wants to let attendees know. You will be one of the speakers to discuss marketplace disruptions; could you please tell us more about that?
MF: We are excited to launch our most ambitious product yet—here at the largest event on payments and financial services innovation. Cambridge Link is an intuitive trading and payments platform that simplifies international transactions—a process that was often extremely complex until now. This launch not only aligns with our overall expertise in optimizing technology to execute integrated payment services but is a response to the continuously evolving payments landscape.
As will be discussed at the panel, a significant disruption in cross-border payments is being driven by the impact of technology on both traditional players and new entrants into this space. Traditional players, such as banks, are in a position of having to decide whether to build their own technology or partner with new entrants, or risk being left behind. However, the opportunity is really in partnering with one another in order to provide access to technology that can be adopted within existing environments.
Cambridge fits between these two ends as a cross-border payment services provider with broad capabilities, a strong knowledge base and proven technologies. For us, we view this event as a significant opportunity to explore new opportunities for collaboration with partners both new and old, as well as an opportunity to engage with our clients and the market in general about their evolving business needs, so that we can ensure we continue to develop solutions that deliver the value they’ve come to expect from us.