New FERF Report Highlights Strategic B2B Payment Challenges and Solutions
The Financial Education & Research Foundation (FERF) has recently released an important report titled "Strategic B2B Payments in the Digital Age," which delves into the challenges faced by companies in optimizing their B2B payment processes. Conducted in collaboration with Boost Payment Solutions, this report presents a comprehensive overview of the current state of B2B payments, aimed at identifying key pain points for organizations and suggesting ways to improve their payment systems to remain competitive in the digital landscape.
Current State of B2B Payments
In a survey of over 130 companies, it was revealed that a staggering 78% of businesses recognize there is room for improvement in their B2B payment processes. A key insight from the report is that 70% of accounts payable (AP) processes remain predominantly manual, with a similar figure for accounts receivable (AR). This concerning statistic highlights a significant reliance on outdated methods that can hinder operational efficiency. Furthermore, the mode of payment largely varies among organizations, as 51% still rely on ACH/Banks transfers, followed by checks (22%), wire transfers (13%), and various commercial card types.
Need for Automation
The report indicates a growing interest in automating these payment processes further, with 64% of respondents expressing a desire for enhanced automation. Unfortunately, 80% of companies facing pressing needs to modernize their B2B payment systems cite obstacles such as budget constraints, lack of executive support, and competing priorities. This makes it imperative for organizations to re-evaluate their payment strategies and align them more closely with their broader corporate goals, as outlined by Andrej Suskavcevic, CAE, President and CEO of FERF.
Best Practices for Improvement
The report recommends several best practices for organizations looking to enhance their digital payment capabilities:
1. Transition from Legacy Methods: A notable 26% of payments at smaller companies are still processed via checks. Shifting towards more digital methods could improve efficiency.
2. Enhance Automation in Payment Processes: Delayed or missing remittance details rank as the most significant pain point for over 60% of AR teams, suggesting a pressing need for improved automation.
3. Evaluate Payment Costs Thoroughly: While 59% of companies report cost of acceptance as a major concern for B2B payments, they often neglect to consider the overall implications on cash flow, such as Days Sales Outstanding (DSO).
This strategic framework prioritizes not merely the method of payment but holistically re-assesses the value these methods can contribute to a company's bottom line.
Strategic Partnerships are Key
As Dean M. Leavitt, Founder and CEO of Boost Payment Solutions articulated, not all payment options are equitable in their offerings. The complexities of B2B payments require companies to collaborate with knowledgeable partners who can provide tailored solutions that not only cater to current organizational challenges but also drive growth and resilience in the face of evolving market demands.
Conclusion and Future Directions
In conclusion, the FERF report sheds light on the critical state of B2B payments today and advocates for continuous evaluation and modernization of payment practices within organizations. As the financial landscape becomes increasingly digitalized, transforming payment processes into strategic assets should be a priority for businesses aiming to thrive. The complete report is available for viewing at lib.financialexecutives.org/research.
Current State of B2B Payments
In a survey of over 130 companies, it was revealed that a staggering 78% of businesses recognize there is room for improvement in their B2B payment processes. A key insight from the report is that 70% of accounts payable (AP) processes remain predominantly manual, with a similar figure for accounts receivable (AR). This concerning statistic highlights a significant reliance on outdated methods that can hinder operational efficiency. Furthermore, the mode of payment largely varies among organizations, as 51% still rely on ACH/Banks transfers, followed by checks (22%), wire transfers (13%), and various commercial card types.
Need for Automation
The report indicates a growing interest in automating these payment processes further, with 64% of respondents expressing a desire for enhanced automation. Unfortunately, 80% of companies facing pressing needs to modernize their B2B payment systems cite obstacles such as budget constraints, lack of executive support, and competing priorities. This makes it imperative for organizations to re-evaluate their payment strategies and align them more closely with their broader corporate goals, as outlined by Andrej Suskavcevic, CAE, President and CEO of FERF.
Best Practices for Improvement
The report recommends several best practices for organizations looking to enhance their digital payment capabilities:
1. Transition from Legacy Methods: A notable 26% of payments at smaller companies are still processed via checks. Shifting towards more digital methods could improve efficiency.
2. Enhance Automation in Payment Processes: Delayed or missing remittance details rank as the most significant pain point for over 60% of AR teams, suggesting a pressing need for improved automation.
3. Evaluate Payment Costs Thoroughly: While 59% of companies report cost of acceptance as a major concern for B2B payments, they often neglect to consider the overall implications on cash flow, such as Days Sales Outstanding (DSO).
This strategic framework prioritizes not merely the method of payment but holistically re-assesses the value these methods can contribute to a company's bottom line.
Strategic Partnerships are Key
As Dean M. Leavitt, Founder and CEO of Boost Payment Solutions articulated, not all payment options are equitable in their offerings. The complexities of B2B payments require companies to collaborate with knowledgeable partners who can provide tailored solutions that not only cater to current organizational challenges but also drive growth and resilience in the face of evolving market demands.
Conclusion and Future Directions
In conclusion, the FERF report sheds light on the critical state of B2B payments today and advocates for continuous evaluation and modernization of payment practices within organizations. As the financial landscape becomes increasingly digitalized, transforming payment processes into strategic assets should be a priority for businesses aiming to thrive. The complete report is available for viewing at lib.financialexecutives.org/research.
Topics Financial Services & Investing）
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