3 Ways Payment Innovation Reduces Costs and Cash Use in Construction “Partnering with a paytech company enables builders merchants to secure payments before delivery, ensure compliance with data regulations, reduce chargebacks and lower the costs and time associated with payment collection,” writes Donal McGuinness, CEO of Prommt In the cyclical world of construction, maintaining cash flow is vital for business survival. Yet, builders merchants often struggle with requesting and receiving payments in a secure, timely and efficient manner. The industry is beset by late payments, transaction errors, fraud and chargebacks. On average, builders merchants wait an alarming 94 days to receive payments, according to the industry’s days sales outstanding (DSO) metric. This prolonged delay, over three months, severely disrupts cash flow and heightens the risk of fraud and insolvency. Notably, late payments were a significant factor in 28 percent of all UK construction sector insolvencies in 2023. Traditionally builders’ providers have leaned on cash or chequeon-delivery methods, despite the inherent risks involved. Delivery drivers face the uncertainty of delivering valuable goods without guaranteed payment. A prevalent alternative has been accepting advance card payments over the phone. Yet, this approach introduces additional risks, including non-compliance with GDPR/UK DPA, PSD2 and card scheme regulations, as well as vulnerabilities to data breaches and fraud. Smart Pay-by-Link solutions can tackle these challenges head-on. Businesses can send a payment request before delivery via SMS, email, web chat, or messaging apps - whichever the customer prefers - and set a chase path through multiple channels. The customer receives a smart link with a choice of payment methods. The checkout process is quick, safe and convenient and the merchant is instantly notified once payment is completed. An enterprise-grade paytech solution provides substantial benefits, including centralised reporting, alerting and tracking of payments across various branch locations and internal departments from a single platform. Partnering with a paytech company enables builders merchants to secure payments before delivery, ensure compliance with data regulations, reduce chargebacks and lower the costs and time associated with payment collection. They can offer flexible payment options and present card or bank (or both) payment methods based on merchant-defined purchase value thresholds. With advanced features, they can automate credit control, effectively manage arrears and personal payment plans and optimise staff time in payment collection. Here’s how payment innovation reduces fraud, costs and cash use in construction: 1. Enhanced Security and PCI Compliance A government study reveals that construction businesses in the UK are particularly vulnerable to cyber fraud, including card-not-present fraud, data breaches, hacking, phishing attacks, card skimming and chargebacks. This vulnerability often stems from inadequate software security update policies or ‘patch management’ compared to other sectors. Security and compliance are crucial in mitigating fraud. The Payment Card Industry Data Security Standard (PCI DSS) protects cardholder data by enforcing a minimum set of security requirements that merchants must meet. Non-compliance can lead to hefty financial penalties and reputational damage in the event of a breach. Since April 2023, adhering to PCI compliance has become even more challenging with the enforcement of the new Level 4 specification. The full-scale audit process is lengthy and complex, but partnering with a PCI-compliant paytech can streamline this process and reduce PCI scope. Tokenizing and securely storing customer card details with the payment gateway eliminates the need for local data storage, significantly reducing the risk of data breaches. Additionally, implementing 3DS as a security standard adds an extra layer of protection by shifting liability from the business to the card issuer, thereby reducing instances of chargebacks and fraud. Also online at: www.dijonline.co.uk 28 THE door industry journal summer 2024 Industry News
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