As much as we’d like to think the day of writing and mailing checks to pay bills is over — or even close to being over — there’s still plenty of reason for businesses to pay attention to those who prefer to settle their debts the old-fashioned way.
In the November-December edition of The Disbursements Tracker, a PYMNTS and Ingo Money collaboration, we learn that about 38% of business-to-business (B2B) sales for small and medium-sized businesses (SMBs) come through paper checks for ad hoc purchases, even in an environment where digital payments are the norm and are used for regular purchases.
Our research finds that delays in issuing, receiving and processing these payments can lead to 30% of payments being received as much as a month past due. The transition to automated payment systems has been slow, with buyers lacking the motivation to move away from conventional approaches.
“Digital disbursement solutions that decouple buyers from sellers can enable buyers to service multiple ad-hoc payees and improve efficiency,” the report says. “Incorporated with discounts for early payments, such solutions can encourage buyers to make the move to digital disbursements for ad-hoc payments.”
The latest Disbursements Tracker also looks at why demand for both consumer and small business loans has grown over the past two years, but the cost of servicing those loans has increased 173% at a time when the average service center hold times are getting longer seemingly by the day.
Digital solutions that are embedded with self-service options can help lenders keep their customers happy and answer their questions more quickly, while also improving collaboration and integrating legacy systems. That comes along with a big-picture digital approach and automated data analysis that will enhance both consumer engagement and risk evaluation.
It probably also explains why 70% of consumers want the option to access to instant payments on demand. Now it’s up to financial institutions to meet the needs of those customers — or lose them to someone else who will.
Meanwhile, Anuj Nayar, financial health officer at LendingClub, tells PYMNTS about how the peer-to-peer lending company uses internal analytics to help speed loan approvals and mitigate risk. Among those data points: 60% of consumers and microbusinesses see instant payments as critical components of loyalty and 68% of payors are willing to pay a fixed fee to offer free instant payments to customers.
LendingClub has automated most loan approvals and is turning those funds around to borrowers faster than ever, Nayar told PYMNTS. Automated data analysis combined with personalized service has sped up loan approvals for known borrowers, he said. That said, the company is ensuring the addition of automation doesn’t alienate those who live in so-called disadvantaged populations.
The report also takes a closer look at the evolving digital lending space and we take a deep dive into how lenders can better meet borrowers’ needs — and boost their own bottom lines at the same time — by cutting out a lot of the cumbersome paperwork and using technology to streamline loan approvals and management practices.
PYMNTS’ monthly Disbursements Tracker examines the latest trends and developments shaping the fast-paced disbursements space and why instant payments are making waves across all sectors worldwide.
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