45% of CEOs Say Business Model Clarity Is Crucial to Optimizing Cash Flow

Small- to medium-sized businesses (SMBs) often find themselves in a constant struggle to manage cash flow, focusing more on survival than growth. Many SMBs use outdated cash management practices, which leads to pressure from delayed payments and inefficient processes.

The PYMNTS Intelligence report, “From Cash Flow Pain to Working Capital Gain: Automated AR/AP Solutions for SMBs,” in collaboration with American Express, reveals the rise of digital automation offers a path to stability and expansion.

Delayed Payments

For many SMBs, limited cash reserves pose an ongoing challenge, with nearly 70% holding less than four months’ worth of cash, leaving them vulnerable to disruptions. As 90% of their revenue is typically spent on daily operations, many business owners are left juggling tight cash flow, with 45% having to forgo their own paychecks due to cash flow issues and 22% struggling to cover essential bills, pushing them toward closure. These factors underscore a need for SMBs to evaluate their cash flow strategies.

In fact, 45% of global CEOs recognize the need to assess their business models to optimize cash flow, and the concern is even greater among smaller firms. According to the report, 56% of CEOs from businesses earning less than $100 million fear their long-term viability without a change in their cash management practices. These delays cause financial strain as company officials seek modernized payment solutions. Traditional, manual payment processing is inefficient and unreliable, further compounding cash flow issues. Yet, automation presents a clear path to relief.

Shifting to Automation

Outdated manual processes for accounts payable (AP) and accounts receivable (AR) are contributors to cash flow issues, with 37% of CFOs and half of senior finance leaders reporting unreliable financial data due to inefficiencies in these systems. Despite concerns about the upfront cost and complexity of adopting new tools, the benefits of automating AP and AR are substantial.

According to the report, businesses that have fully automated their cash management systems experience improved accuracy, with 95% of firms seeing more reliable processes. Additionally, 84% report increased savings and growth, with some businesses saving up to 20 hours per week by consolidating their cash flow management tools onto a single platform. This enhanced efficiency helps businesses stay afloat and provides a foundation for sustainable growth.

Lean Into Automation

By embracing automation, SMBs can positively impact cash flow, changing it from a source of stress to a catalyst for growth. Digital tools can help businesses predict optimal payment times and accelerate payment cycles, improving working capital management and driving financial stability. This focus on automation allows SMBs to make smarter financial decisions, reduce operational friction, and achieve long-term success.

According to the report, SMBs can unlock growth opportunities by adopting digital cash flow solutions. As the pressure from delayed payments and outdated manual processes grows, the transition to automation offers a path forward — turning financial instability into a springboard for business expansion.