Small- to medium-sized businesses (SMBs) experience several problems when making payments to suppliers. The most common pain points are manual invoice review, the high cost of using credit, and the high cost of making payments.
Those problems are cited by 45%, 43% and 41% of SMBs, respectively, according to “The Future of Business Payables Innovation,” a PYMNTS and Plastiq collaboration based on a survey of 500 SMBs.
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Why is manual review of invoices the No. 1 pain point? When invoicing processes are not automated, SMBs lose visibility into cash flows as well as control over liquidity. Manual invoice entry can cause errors that lead to more time spent correcting incomplete payments.
As for pain points Nos. 2 and 3, the high cost of payments and credit: When payment choice is not available, SMBs may resort to high-cost credit options or fee-laden payment methods to resolve their liquidity needs.
The next two most-cited pain points after those three are each cited by 35% of SMBs: time consumption and a lack of financing options.
SMBs’ preferred methods when making payments are regular automated clearing house (ACH), check and same-day ACH. These are cited by 22%, 16% and 15% of SMBs, respectively.
No other payment method was preferred by more than 10% of SMBs.
Those preferred methods change significantly based on whether SMBs are making or receiving payments. SMBs’ preferred methods when receiving payments are instant or real-time payments, same-day ACH and transfer to digital wallet. These are cited by 28%, 24% and 10% of SMBs, respectively.
SMBs want easier payment processes, just as consumers do. Unlike consumers, however, SMBs exist within a space where the immediacy and simplicity of making and receiving a digital payment have been elusive.
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