49% of Firms Experience Fewer Late Payments After Automating AR Processes

Digitizing business-to-business (B2B) payments data and managing it via enterprise resource planning (ERP) systems can improve collections, days sales outstanding (DSO) and operations.

According to the Global B2B Payments Playbook, a PYMNTS and Worldpay collaboration, 49% of firms that have adopted automated accounts receivable (AR) processes report lower overall delinquency rates, 62% report reduced DSO and 72% report they’ve saved operational costs.

Get the report: Global B2B Payments Playbook

These join the even more common benefits of incorporating automated AR technology. Among these are faster processing speed (cited by 87% of those who have adopted this technology), improved team efficiency (79%) and a better customer experience (75%).

Late Payments Weigh on the Bottom Line

Many B2B firms have recognized just how detrimental late payments can be to their operations, prompting them to seek out digital solutions to free up more cash. A recent report found that 80% of B2B firms believe that late payments stemming from inefficient AR operations are threatening their businesses. It also found that 93% of firms must contend with negative effects as a result of their AR approaches and that 37% say their AR practices are preventing them from accurately predicting cash flow.

The study pointed to manual AR processes as the main factor behind this inefficiency: 99% of firms’ senior decision makers said that their organizations’ AR operations still featured at least some manual processes. Respondents noted that digitizing their AR processes could solve many of these issues, and 95% said that they should be investing more in technologies and innovation.

A notable number of respondents also expected to see key benefits after digitizing some of their operations, including improved cash flows (expected by 32%), improved forecasting (30%) and cutting down on late invoices (27%).

Gathering and Managing Data at Scale

Firms often approach automation as a multifaceted process, reducing their use of legacy B2B payments, like paper checks and wire transfers, increasing their usage of digital B2B payment methods, like virtual cards, and then automating those digital transactions via integrated ERP systems.

The chief benefit of such digital solutions is the data they can gather and manage at scale. Digitizing B2B payments data and managing it via ERP systems enables businesses to more accurately process far greater payments volumes than would be possible when using checks or even automated clearing house (ACH) transfers, all while requiring fewer resources. Firms can also analyze the same data and use it to automate B2B firms’ security practices using algorithm-based fraud detection.

B2B automation can serve as a powerful tool to help businesses future-proof their payments operations. Leveraging cloud-based ERP solutions, in particular, can make payments faster, safer and more efficient while also supporting an increasingly remote workforce.