Businesses Mull Move to RTP to Capture Cash Flow Benefits

Real-time payments usage may be nearing an inflection point. These payments still account for just 2% of corporate payments sent and 1.3% of payments received, but a growing number of corporate treasurers and billing and payment executives recognize the opportunities these payments offer in helping companies shore up cash flow management and maximize efficiency. As more corporate accounting and finance departments install the necessary infrastructure to handle real-time payments, this payment method may steadily replace more familiar and established forms of business-to-business (B2B) payments like credit cards and checks.

Nearly three-quarters of companies receiving real-time payments say they expect to increase payments received via this method in the next year, and 69% of companies sending real-time payments say they expect to increase usage of real-time payments. Although real-time payments can have some drawbacks, such as the expense of implementing the necessary systems and the costs associated with making the payments, many businesses recognize that the benefits handily exceed the shortcomings by a significant amount.

These are just a few of the findings from Real-Time Payments: The Fast Track To The Future Of Corporate Payments, a collaboration between PYMNTS and The Clearing House. The report provides insights into the rapidly growing market for real-time payments and examines how companies leverage real-time payments to improve key aspects of their businesses. Our findings are based on a survey of 100 executives at companies with $50 million to $1 billion in annual revenue conducted from Jan. 12 to Jan. 31, 2022.

Some additional key findings include:

• Eighty-six percent of businesses with $500 million to $1 billion in annual revenue use real-time payments to make or receive payments. The larger a company is, the more likely it is to be a more active user of real-time payments than a smaller company. Nearly 10% of the companies surveyed that use real-time payments come from the $500 million to $1 billion revenue range.

• Twelve percent of companies that transmit real-time payments say the improved cash flow management they get from this payment method is its most important benefit. Double that share say the improved cash flow management is the most important benefit of receiving real-time payments. The benefits extend to a range of accounting tasks, such as better reconciliation of payments made and received to the core accounting system and more efficient working capital management.

• Seventy-four percent of companies receiving real-time payments say they expect to increase the amount received during the next year. Sixty-nine percent of companies transmitting these payments say they expect to increase the real-time payments they send out. In addition, more than three-fifths of the companies that have not been users of real-time payments are interested in starting to use them.

The most forward-thinking corporate accounting and finance departments recognize the benefits real-time payments offer in improving the management of cash flow, payables and receivables. Real-time payments can help companies recognize incoming and outgoing payments more quickly. Although the overall proportion of payments made via real time is still somewhat limited, companies that understand that the myriad benefits outweigh the costs and are quickest to adopt this payment method stand to reap the benefits this payment method offers.

To learn more about how corporate accounting and finance departments benefit from real-time payments, download the report.