B2B Payments Making AR Modernization Gains

Everyone’s working toward a recovery, and there are glimmers of economic optimism popping up all over. That doesn’t alter the present reality that commerce writ large is undergoing simultaneous transitions, many of them seismic – and accounts receivable (AR) is a big part of it.

“Businesses are grappling with many stressors during the ongoing COVID-19 pandemic, working to find their footing as they handle in-house operations and managing incoming and outgoing cash flows,” according to PYMNTS’ August Digitizing B2B Payments Tracker® done in collaboration with Deluxe.

“Many of these companies previously relied on accounts receivable (AR) processes designed for teams that shared offices, but adapting their operations to the current remote work-focused environment is crucial to their survival.”

Bridging the gap between a dawning digital-first payments landscape and that of outdated yet still widespread paper-based processes by optimizing treasury management systems (TMS) is a primary focus of the August Digitizing B2B Payments Tracker®.

Hybrid Alternatives to AR Modernization

AR modernization is a vital step for the reformulating connected economy. It’s happening, though rarely as a total overhaul of systems and procedures. Even large companies that weathered the pandemic well have been reluctant to take on top-down upgrade projects.

There are hybrid alternatives, however, that allow companies to utilize some existing paper-based operations and preserve operational flow at a delicate time, while digital solutions are employed to target specific AR tasks that automation does more efficiently.

“Clients themselves have been happily utilizing digital receivables for many years, but the back-end processes tasked with supporting them remain outdated and frustratingly slow. [A 2019 report] revealed that 63 percent of those surveyed claimed their TMS operations are either completely unconnected or only somewhat connected to their enterprise resource planning (ERP) tools, according to the August Digitizing B2B Payments Tracker®.

“Many continue to rely on systems that are ill-suited to managing the increasing number of transactions and other requests they are receiving through online and mobile channels. They are also comfortable with and reliant upon check-based payments, though they are interested in digitizing the solutions that support them. Motivation to upgrade TMS and the technologies attached to these systems has grown during the pandemic … with 95 percent of treasury professionals in one recent study noting they support further digitization of their operations,” the new Tracker states.

Risk vs. Reliability

With risk, volatility and ever-present cashflow worries hanging over most businesses right now, the pandemic seems a better time to remodel a kitchen than to overhaul an AR workflow. But that’s exactly what has to happen as SMBs and enterprises alike navigate COVID unknowns.

“Firms are on the hunt for technologies that can help them meet clients’ new digital standards, but they still value the reliability of legacy payment methods like checks,” the new Tracker states.

“Leveraging artificial intelligence (AI), API-connected platforms and other automated tools can accelerate the processes attached to such payments without forcing businesses to upgrade their infrastructures.”

It’s important to remember that payments modernization isn’t an all-or-nothing proposition. Many companies are selectively deploying tech where it’s needed most right now, leaving some paper in place so as not to add any more ripples to waves of COVID-era disruption.