Scrap Expo 2024: Embracing digital payment solutions

Are traditional forms of payment becoming a liability for metal recycling operations?

Cash, checks and electronic fund transfers are the most common forms of payment in the metals recycling industry and, according to GreenSpark Software CEO and co-founder Gordon Driscoll, have a fair amount of risks and limitations.

First, traditional forms of payment are time consuming.

“People chalk this up to the cost of doing business,” Driscoll said during the Digital Payments: Maximize Profits, Minimize Risk session at Scrap Expo 2024.

With traditional forms of payment, customers must take time to physically withdraw and deposit money.

“Then, your accountants have to reconcile all of these transactions, both on the payout-side and on the pay-in-side,” he said. “It’s a never-ending cycle that eats up valuable time and resources.”

Driscoll highlighted the inherent risk of relying on cash and checks and said they’re “magnets” for theft, fraud and misappropriation.

“Everyone’s seen a wash check before,” he added. “Everyone [knows] that feeling in their stomach when the Brink’s truck shows up.”

Traditional forms of payment also come with costs, including ATM fees for cash transactions, bank fees for checks and security and transport costs for loading and unloading ATMs.

Additionally, Driscoll said payments are often siloed and are rarely fully integrated into a business’ operational software. Although check numbers and cash payments may be recorded, it can be difficult and time-consuming to track these transactions, manage cash flow and gain financial insights from operational software, he said.

“Lastly, this is a bad experience, not only for you, but also for your customers,” Driscoll added. “Customers have to deal with the inconvenience of cash withdrawals [and] depositing checks. … This experience impacts customer satisfaction and loyalty, especially as the world becomes more digital and this market becomes more competitive.”

These issues are not unique to the recycling industry. In fact, small- to mid-size businesses across various industries are grappling with financial issues, specifically around accounts payable (AP) and accounts receivable (AR) management, Driscoll said. According to a survey conducted by GreenSpark, $50,000-$150,000 is lost per year due to manual time spent, delayed payments and suboptimal cash flow.

Digitization has become the solution to many of these issues.

“Back offices, specifically, are crying out for digitization,” Driscoll said.

He warned against relying solely on accounting software to integrate financial workflows and modernize payments because “there’s a lot of work that can be done and a lot of time and money that can be saved with better AP and AR management.”

GreenSpark’s portfolio of services is designed to digitize a user’s payment workflows and embed it directly into the user's software platform.

By embedding payment workflows into operational software, users can enhance payment flexibility and speed, Driscoll said. Payments can be made from anywhere at any time.

Another benefit includes increased security.

“You have real-time controls and full auditability on all payments,” he said. “This not only reduces the risk of fraud, but also ensures compliance with different security regulations if you’re sending things across borders.”

Payment workflow integration also enhances transparency, increasing visibility into the status of payments and cutting down reconciliation time.

Looking to the future of financial workflows in the recycled metals industry, Driscoll said better access to capital through embedded lending will be key. According to a survey from the Federal Reserve, less than half of small- to mid-size enterprises can obtain the funds they need from traditional banks and financial institutions.

Early next year, GreenSpark is planning to launch a suite of lending and financing products with a focus on invoice factoring.

“We can help you achieve better access to capital, which means you can reduce risk in volatile markets and grow more quickly without having to manage every single invoice or every single payment like it’s life or death,” Driscoll said.  

Ultimately, there is an opportunity within the industry to solve payment challenges by embracing digital payment solutions, Driscoll concluded.

“You’re not just solving today’s problems or a month’s worth of reconciliations,” he said. “You’re positioning your business for future success. You’re improving operational efficiency, enhancing customer satisfactions and opening up new avenues for growth with better financial management and planning.”