PYMNTS Intelligence: Technology Is Yielding Better Working Capital Results

Businesses have turned to a number of potential solutions to address cash flow. In the United States, 60% of small to midsized businesses (SMBs) in one study said they have implemented real-time payments solutions to reduce the turnaround time between incoming and outgoing payments. In addition, another study found that 81% of healthcare companies and 67% of finance and insurance businesses have plans to invest in real-time payments.

Companies are also backing up faster payments capabilities with the software and hardware needed to keep them running smoothly. Forty-eight percent of CFOs said their companies have invested in digitized working capital programs, and 77% of companies that made such investments reported improvements as a result.

Companies want solutions that address everything

Businesses are increasingly looking for all-in-one platforms — centralized digital systems that incorporate accounts receivable (AR) and accounts payable (AP) into a single interface. Sixty-seven percent of those expressing interest in an all-in-one AR/AP solution said they would be at least somewhat likely to accept transaction fees of 1% or less. Forty-one percent said the same if transaction fees were below 2%.

This willingness to pay for such solutions may make sense in relation to overall cost savings. Forty-one percent of SMBs reported high costs already associated with business-to-business (B2B) payments, and 28% cited cash flow visibility as a problem in both AP and AR processes.

Automation streamlines and reduces errors

There are clear advantages to technology such as automation, as it not only keeps better track of accounts but also speeds processes, thereby driving significant efficiencies — and often even direct savings. While less than half of all surveyed software-as-a-service (SaaS) companies reported receiving early payment discounts from suppliers, two-thirds of those with non-payroll spend management said the same.

Another survey of companies investing in AP automation showed that 98% will improve the speed of AP processes. There are other benefits as well. For example, 91% will be able to pay vendors in their local currencies following automation, and 90% are expected to see better payments visibility and transparency.