Although business-to-business payments have been far slower to digitize than consumer payments, the COVID-19 pandemic has fueled the shift toward faster electronic payments on the business side as well.
Indeed, getting paid promptly is the top priority for vendors receiving payment, MineralTree discovered. Payment speed even beat being paid the correct amount.
It also came in ahead of payment processing cost, quality of remittance data, responsiveness to inquiries and whether payment preferences were respected. MineralTree surveyed 912 finance professionals handling AP, as well as 180 suppliers, between February and April.
Issues such as supply chain disruptions and the need to pay vendors on time have applied pressure to accounts payable, MineralTree noted. Supply chain disruptions created challenges such as invoice processing issues and delays (44% of AP teams reported this), and payment delays and reconciliation issues (39% said this).
About 71% of accounts payable teams told MineralTree they plan to use electronic payments for more of their spending. That matches vendor desires, with 82% saying they want their customers to make more payments digitally, the report said.
Finance leaders said they’re shifting to electronic payments for time savings (77%), more timely payments (63%), cost savings (57%) and increased security and fraud protection (49%). After virtual cards, Automated Clearing House (ACH) payments saw the next biggest gains – 67% said they’ve turned to that payment method more to pay suppliers.
Additionally, 31% of companies put more payments on corporate cards, 20% said they turned to wire services for more payments and 19% said their use of international or cross-border payments increased, MineralTree said.
Automation is another aspect of B2B payments that’s gaining steam in both payables and receivables. As companies ramp up digitization efforts and prioritize on-time vendor payments, the share of those who’ve automated the AP process jumped from 32% last year to 52% this year, the report said.
Still, many have just partially automated the process. Just 16% said they’ve fully automated AP, MineralTree reported. About 42% of companies haven’t turned to automation because they say their current processes work.
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The Federal Reserve plans to unleash a U.S. real-time payments system next year in the form of FedNow, but it’s an open question as to whether, or how, consumers and businesses will adopt instant payments.
The leader of the Electronic Payments Coalition tells people looking to blame credit and debit card companies for higher gas prices to find a different scapegoat.
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