Payments with purpose: payment transformation in the public sector

5-minute read

Almost half (48%) of all business leaders believe that inefficiencies in the back office are causing problems for their organisation, according to our latest research conducted with FT Longitude. But how can the public sector identify these inefficiencies and build a data-driven case for change, so they can make the most of their resources?

Payments with purpose: payment transformation in the public sector

Payment transformation has become a hot topic for the private sector, but what role does it play in the unique public-sector sphere? We spoke to Helen Young, our Director of Public Sector, Real Estate, Scotland & Northern Ireland, and Thomas Stratton, our Head of Central and Local Government, about how payment data insight can help reduce costs and increase efficiencies across local and national government, charities and not-for-profits (NFPs), social housing and educational organisations.

Is it time to prioritise payments?

“Unlike private-sector businesses, most public-sector organisations don’t have a dedicated payment team,” says Helen. “Without that focus on the power of payments, changing technology, capability and data insight tends to get overlooked.”

The good news is that public-sector organisations are now realising there are opportunities such as digitisation to improve operational efficiency – often without incurring extra costs.

It’s not just individual organisations looking to reap the benefits of change. There’s a national strategy for digitisation to achieve greater agility and resilience. Digitisation can also help further other agendas, such as  those to support local and small businesses more.

A tailored approach to supplier payments

“An important efficiency conversation is around supply chain payments,” says Thomas. “Data provides invaluable insight into who the organisation is paying, how often and how much.”

By analysing the accounts payable data, it’s possible to start understanding the hidden cost of onboarding one-off suppliers or see where there are opportunities for early payment discounts and rebates. From there, organisations can start exploring options and seeing the quantifiable benefits of any changes.

With digital payment processes, reconciliation can be automated to eliminate errors, speed up admin and give managers reporting tools with immediate visibility over spend.

Accepting payments: does customer experience matter?

Our research shows that 68% of leaders see simplicity and ease of payment as the best opportunity to enhance the customer experience.

Charities and NFPs have had to respond to changing consumer payment trends fast. Cash donations are being quickly replaced by preset donation amounts, often taken by unattended contactless card readers. Any friction at checkout can get in the way of good intentions, so many charities are investing in a smoother payment journey.

Similarly, educational organisations know that students are rarely without their phones, making digital wallets ideal for everything from tuition fees to cafeteria payments.

How improved payment experiences benefit the wider organisation

When it comes to compulsory payments such as taxes or social rents, there’s less concern about cart abandonment. However, customer payment experiences have a wider impact. Limited payment options restrict consumers who want to pay quickly using their preferred method. A choice of payment options across channels encourages customers to complete the transaction quickly without needing to get support or be chased – to the benefit of everyone.

“While some larger government agencies such as HMRC have SLAs to track customer experience, the move to a smoother payment experience is less altruistic,” says Helen. “Reducing friction at checkout with instant digital payments reduces support centre calls and the need to chase payments.”

Consumer payment data comes into its own when pinpointing friction in the payment journey – it can reveal different ways to maximise payment collections and improve customer experiences.

Helen Young, Director of Public Sector, Real Estate, Scotland & Northern Ireland

More room for innovation

“Local authorities are looking for opportunities to increase revenue,” says Thomas. “A prime example is taking back outsourced services such as car parks, where fast, secure and easy payment options are important. So improved payment capability can help ensure success.”

While the sector is known for a cautious approach to change, there are payment innovators. HMRC’s adoption of an open banking payment option has been trail-blazing even compared to the private sector, and the Ministry of Defence was one of the first departments to adopt digital supplier payments.

The importance of getting payments and partnerships right

Having accurate, up-to-date and fully reconciled payments is vital. Mistakes can carry far-reaching real-world consequences in the public sector.

“Organisations need to know straight away whether a payment has or hasn’t been made,” says Helen. “They need a reliable partner whose solutions give them that information in a timely and accurate way.” However, research shows that many organisations don’t feel equipped to manage change around payments. In fact, over half of all leaders (53%) identified a lack of skill internally as preventing payment transformation. But this is where the right partner can help.

“Our team brings a lot of experience, including best practice and valuable insight from working with other organisations in the sector. We can also plug any gaps in knowledge or talent, whether you need to lean on our payment experts to help drive buy-in or need help to upskill your staff,” says Helen. “We see ourselves as a resource for our clients – we offer a lot of free advice and tools, including our analytical services.”

The payment part is just the start

With payment transformation well-established in the private sector, the opportunity now is for public-sector organisations to drive greater efficiency with proven solutions.

“Our collaborative approach starts with listening,” says Helen. “We don’t believe in a one-size-fits-all approach or a hard sell. We work with clients and review their data to create tailored advice and recommendations to meet their unique challenges, objectives and ambitions.”

And those challenges change over time as new policies, regulations, technology and even consumer behaviours emerge. In this light, payment transformation is best seen as a process of continual improvement. It needs a partner who has access to a wide source of data insight, expertise and complete capability to deliver what is needed to realise your ambitions.


Head this way for more insight on your business sector

We teamed up with FT Longitude to hear what 500 senior leaders are thinking about the payment landscape today and how their businesses are preparing for the future. Read more about these payment trends or discover thought-provoking insight on these sectors.