24% of B2B Payments Made by Large Firms Are Made via Check

Smaller enterprises often face a familiar dilemma regarding technological investment. They tend to be highly motivated to minimize overhead, boost efficiency and embrace tools that might confer competitive advantages. At the same time, they also may feel they lack the monetary and human capital to take on major technological overhauls that might necessitate downtime and retraining. 

As a result, small- to medium-sized businesses (SMBs) are more likely to pay their business partners with paper checks, according to The Strategic Role Of The CFO, a PYMNTS and Versapay collaboration. While firms generating more than $100 million in sales report making about 24% of their B2B payments by check, smaller firms with between $25 million and $100 million in sales make 26% of their B2B payments by check. 

“Traditional, analog-centric endeavors — such as manually sending invoices and receiving and processing checks — are tedious, inefficient and prone to errors,” Versapay CEO Craig O’Neill told PYMNTS. “In fact, many accounting processes are unwieldy and cumbersome for SMBs.” 

Addressing a Widening Disconnect 

Smaller businesses are exceptionally ambitious in how they view accounts receivable (AR) and accounts payable (AP) modernization — they want transformative change, PYMNTS research found. Their digital efforts since the pandemic have not been as broad in scope as those of large companies, however.

One barrier looms larger than any other for SMBs considering modernizing their AR and AP systems: the perception that they lack the necessary IT resources to support digitization. This extends to SMB leaders’ attitudes toward their current technical capabilities, which they also view as a potential impediment. 

“To increase productivity and accelerate cash flow, SMBs need to address the widening disconnect between their accounting teams and their customers and begin to work collaboratively by sharing access to the same information in real time, over the cloud,” O’Neill said. “Recent events have only exacerbated this trend, and we’re now seeing this shift taking place, en masse, and it all begins with automation.” 

Delivering Exceptional Customer Experience 

These perceived challenges are understandable, and SMBs must be especially diligent in weighing the potential benefits of technology with their costs. However, some of the concerns may be overestimated, given the ease-of-use offered by state-of-the-art digital accounting and payment technologies. 

Leading digital AR and AP technology providers offer cloud-based, collaborative platforms, minimizing the need for on-premises technology and featuring intuitive interfaces that integrate easily with existing enterprise resource planning (ERP) and accounting systems. 

In taking on this process, smaller firms may wield an important advantage over larger ones, since the volume of accounts they handle is far more manageable. In this sense, cloud-based digital accounting platforms may be uniquely suited to smaller businesses, given that they tend to be less weighed down by bureaucracy and legacy systems than large corporations. 

“Firms are focusing more on delivering exceptional customer experiences, and accounts receivable digitization is being viewed — rightly so — as a strategic lever for this,” O’Neill said. “No longer are payments and AR viewed predominantly as behind-the-scenes activities that must be done after contracts are finalized.”