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Industry roundup: 23 June

Invoice write offs in Australia more than double during pandemic

Businesses across Australia are feeling the pinch following a full year of the COVID-19 pandemic, according to a report by credit insurance firm Atradius. The Payment Practices Barometer survey of both large and small businesses looked at B2B customer payment behaviour over the past year. 

Some 5% of all credit sales were written off as uncollectible, more than doubling the 2% average recorded prior to the pandemic. The same story applies to late payments, 54% of business invoices are overdue (compared to 21% in the pre-pandemic year). In addition to the economic stressors, these significant increases can partly be explained by a large rise in the number of credit sales. More than 4 in 10 of the businesses polled (42%) reported accepting credit requests far more frequently than they did before the pandemic.

On average it took the construction industry one week longer than last year to settle overdue invoices. Construction businesses reported an overall DSO that is twice as long as last year (now averaging 49 days). 40% of industry respondents expect DSO levels to further increase this year. A significant percentage of businesses across all sectors pointed to liquidity as one of their greatest concern alongside the health of the global economy. As much as half of the agri-food industry believes the domestic economy will drive improvements in their sales and profits rather than export trade.

Perhaps unsurprisingly, 3 in 5 of the businesses surveyed reported an increase in debt management administrative costs. However, many businesses said that the key to navigating the difficult economic climate was agility. For example, as many as 67% of respondents in the chemicals industry believe the businesses that were most successful in adapting to the pandemic challenges, will more often accept trade credit requests from their customers going forward.


Tungsten Network launches cloud-based workflow product

Tungsten Network has announced the launch of Universal Workflow, a cloud-based solution that provides customers the flexibility to connect to any and multiple ERP systems. Tungsten says that this ‘any to any’ connectivity is a significant expansion to its Workflow product. All Tungsten Workflow solutions automate accounts payable (AP) processes from initial invoice receipt through to submission for payment, providing reporting and a full audit trail of all activity. AP staff use Tungsten Workflow’s data insights to fine tune processes, which in turn reduces costs and efforts.

Customer demand was the catalyst for the Universal Workflow development. Tungsten created the new cloud-based solution to serve customers wanting to expand the scope of Tungsten solutions within the business. For customers managing multiple ERP systems, this solution should create efficiency and cost savings benefits previously only available to select users.

"Companies that implement Tungsten Workflow in conjunction with e-invoicing can reduce processing costs by 60% or more," said Jon Cage, chief technology officer at Tungsten. "Universal Workflow further eliminates traditional integration costs and effort related to hosting, hardware, and administration. We handle all of that for our customers so they can focus on the business, not technology."


Electronic trading in syndicated loan market poised for growth

A new report from Coalition Greenwich says that the sudden switch to digital workflows caused by the global COVID-19 pandemic could bring electronic trading to one of the last holdouts in financial markets: syndicated loans.

Past attempts to inject technology into syndicated loan trading have largely failed. By most accounts, today’s loan market resembles the corporate bond market 20 years ago. Only one multi-dealer platform run by MarketAxess and one single dealer platform offered by Bank of America exist to facilitate electronic loan trading, which Coalition Greenwich estimates accounts for only 1-2% of total secondary market activity on a notional basis. However, the technology surge triggered by work-from-home requirements last year could bring long-awaited change.

"Based on our research and conversations with loan market participants, we believe the willingness to transform this market exists and the technology needed to improve the end-to-end workflow is ready for prime time," said Kevin McPartland, head of Research in the Coalition Greenwich Market Structure and Technology group and author of 'Syndicated Loan Markets Poised for Technology Adoption'.

The past 18 months have created an e-trading tailwind for a large portion of the fixed-income market, with traders and investors accepting the benefits of more technology as they worked from home. US high-yield corporate bond markets, for example, saw e-trading volumes jump 50% from the beginning of 2020 through the end of the year.

Markets do not, of course, become electronic overnight. Even with the right technology and market participant willingness, such behavioural change takes time. Loans markets bring their own set of market structure complexities that require solutions not found in other fixed-income markets - incentives to trade with the loan agent, two-week settlement times and a lack of consistent market data. All-to-all trading for corporate bonds took nearly 10 years as market participants wrapped their head around the idea and the technology improved. Today, it is growing rapidly.


Gresham Technologies completes acquisition of Electra Information Systems

Gresham Technologies, a global fintech that specialises in providing real-time solutions for data integrity and control, banking integration, payments and cash management, has announced the closing of its acquisition of Electra Information Systems.

First announced in May 2021, the US$38.6m acquisition is designed to reinforce Gresham’s market leadership position in reconciliation solutions for financial markets and strengthens the fintech’s rapidly expanding operations in North America.

This strategic investment follows Gresham’s acquisition of Inforalgo Information Technologies in July 2020 to enhance the firm’s regulatory reporting and connectivity capabilities. The deal should enable Gresham’s customers to benefit from a rich portfolio of cloud services, covering STP connectivity, data aggregation and control, matching and reconciliation, exception management, regulatory reporting, banking connectivity and payments.

Electra is a provider of post-trade automation solutions, with a focus on improving efficiency and mitigating risk for buy-side participants. The combined business will be supporting 270 customers in 20 countries around the world. The deal reinforces Gresham's strategy to deliver functionally rich solutions that can meet the exacting requirements of specific industry segments, asset classes and use cases, all on one enterprise-grade platform.

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