Despite the entrenchment of automated clearing house transfers as the preferred payment method for real estate companies and the advancement of real-time payments observed in recent years, many of the B2B payments in this industry still occur via checks or cash.
Nearly 21% of all B2B transactions completed in the industry are done with checks, while 4% are paid in cash, according to the PYMNTS Intelligence study “The State of Real-Time Payments.” The study examined the state of real-time payments among other payment methods across four industries: real estate, manufacturing, retail and insurance.
No other industry in the study made more than 15% of B2B payments via check, and no other industry used checks and cash collectively for more than 22% of B2B payments. Why has the real estate industry held on to these legacy payment methods for so long? Receivers’ widespread acceptance and trust are the reason, according to the report.
Using these methods has severe implications when managing accounts payable and accounts receivable operations, however. These methods can lead to more manual labor, longer processing times, and more friction and accounting errors that must be properly tracked and solved. These can cause operating inefficiencies and erode a firm’s profitability.
Other than checks, ACH and same-day ACH remain the most used payment methods in the industry, and many real estate firms are actively searching for newer and faster alternatives that favor streamlined AP/AR processes. Another PYMNTS Intelligence report of the series found that 17% of firms in this sector are on the cusp of adopting virtual cards, for example, likely to try to retain the acceptance advantages they currently have more efficiently and securely.
Real estate firms are at a crossroads when it comes to B2B payments. Although many remain tied to traditional methods because they are widely used and accepted by their counterparts, a clear and widespread interest is forming in finding and adopting faster and more efficient alternatives.
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