CFOs Ditch Paper to Prioritize Digital Payments

Through the past few years, companies have proven a level of resilience that scarcely seemed imaginable when the pandemic shook the globe. Businesses had to examine internal processes urgently to ensure continuity as we all sheltered in place.

Robert Johnson, senior vice president of payments at Corcentric, told PYMNTS that the introspection and the operational fine tuning is far from over, although the focal points are changing.

During the pandemic, he said, chief financial officers were focused on the elimination of paper-based, in-person processes. With the pivot to pretty much everyone working from home, it was first and foremost critical to make sure that invoices were still being processed and remittances were applied properly to accounts receivable (AR) payments.

And now, he said, with the great reopening, staff are being redeployed. Most executives are now turning to more efficient working capital management strategies, as found in joint research between Corcentric and PYMNTS.

Investing to Improve Cash Positions

Johnson said the data shows that roughly 60% of CFOs are investing in opportunities to improve their cash positions to manage days sales outstanding (DSOs) and days payable outstanding (DPOs) most efficiently.

“Better [accounts payable (AP)] and AR workflows are critical,” he told PYMNTS, adding that “as rudimentary as that might sound, it’s key to make sure that payments are being processed as quickly as possible.”

Better management of those back-office processes means that buyers can maximize discount opportunities if there is the ability to pay a supplier early, he said.

“That cash can then be redeployed into the business for more strategic opportunities,” Johnson noted.

The data also shows that CFOs are investing time and money in fraud prevention. With the movement of payments into digital channels, Johnson said, that shift has opened more attack vectors for fraudsters, who had previously been focused on paper checks.

“Checks were the primary payment modality — but with digital payments comes a higher risk of fraud,” he said.

Increasingly, companies have been running penetration tests as part of their annual security protocols.

“We’re finding that many companies are now running social engineering tests as well,” he said, where individuals seek to “test” a company’s defenses by calling into a firm, impersonating a vendor, and seeing if they can get bank accounts changed or to have invoices sent to different addresses.

Looking ahead, Johnson said that several verticals are ripe for modernization, notably manufacturing. The last round of automation in that sector stretches back to the earlier part of the millennium, with a pivot toward accepting automated clearing house (ACH) payments.

“Now in 2022, suppliers want choices,” he said. “They want to have a menu of choices of different payment modalities that the buyer can pay with. But the manufacturers are only supporting checks and ACH.”

Real-time payments are becoming more prevalent, and companies including — and beyond — the manufacturing vertical will have to work with technology partners that can help them access newer payment modalities, he said.

In the bid to manage it all and to improve payments while protecting the business itself, Johnson said CFOs must tap into the power of buyer/supplier networks.

“The buyers and suppliers are able to talk to each other,” said Johnson, who added that “you can perform surveys on that network to find out that what’s working for a supplier may not work for a buyer and vice versa.”

Collaboration is fostered by those online networks, and firms can explore remittance formats and payment modalities that are beneficial to all parties.