BOSTON and LONDON, March 9, 2021 /PRNewswire/ -- More than 80% of businesses say the future of their company is threatened by late payments, a result of outdated accounts receivable (AR) processes, according to a new report from global payment technology expert BlueSnap.
The new research reveals that current AR practices are impacting cash flow, human resources and customer retention while also being a drain on senior executive time within B2B businesses.
The BlueSnap Progressing Payments Report found that 93% of organizations experience negative consequences due to their current approaches to AR, with more than a third (37%) unable to forecast cash flow accurately.
On average more than a quarter (27%) of customers exceed their payment terms, resulting in 30% of an organization's monthly revenue being tied up in AR. This is such a major issue that 81% of businesses agree that the future of their business is threatened by a lack of cash flow, brought on by overdue invoices.
A major culprit in all of this is the reliance on manual AR processes, with 99% of senior decision makers admitting that at least part of their organization's practices are not automated. These included faxing (32%) and mailing (40%) invoices and accepting payments in cash (13%) and physical cheque (11%).
The use of manual processes not only increases the risk of human error but also demands more time and resource spent managing invoices. On average, senior decision makers estimate that a total of 11 working hours are spent managing a single invoice, with 71% reporting that up to 15 people are involved in this process.
"Cash flow is rightly considered king, yet at a time when revenues are under continual pressure, many businesses rely on outdated, manual processes to manage it all," said Ralph Dangelmaier, CEO at BlueSnap. "The only way for companies to improve forecasting accuracy, track invoices and reconcile payments efficiently is to digitize and automate as much of the process as possible.
"Many of the organizations we spoke to consider themselves to be on their digital transformation journey, but the results show that when it comes to payments, B2B firms still have a long way to go compared with their B2C counterparts."
Respondents recognized the need for change – 95% thought they should be investing more in AR automation and payment technologies, with predicted benefits including improved cash flow (32%), better forecasting and planning (30%), and reducing late invoices (27%).
However, they also saw the opportunity for increased growth – 28% believe it would give their organization the ability to invest and grow, while 25% linked AR automation to winning more business from existing customers.
"As more and more businesses digitize their entire organization, and the lines blur between markets, those companies that can react quickest will be the ones that succeed," explained Dangelmaier. "That means automating as many processes as possible. This is the only way they can cut the opportunity for error, improve overall accuracy and access the data they need much faster. In doing so, they can understand how much cash they actually have and see where the opportunities for investment and growth lie."
Notes to editor
The BlueSnap Progressing Payments Report was fielded in October/November 2020 and gathered data from a total of 800 senior decision makers (500 respondents from the US and 300 respondents from the UK), working in organizations with global annual revenues of between US$5 million and $1 billion.
For media enquiries, please contact: Hard Numbers Team for BlueSnap [email protected]
BlueSnap's All-in-One platform helps B2B and B2C businesses increase sales and reduce costs by providing everything they need to automate accounts receivable and take payments globally. Our Platform enables global digital invoicing with embedded payments, subscriptions, customer communications, payments reconciliation and a branded customer portal. Businesses can accept any payment with ease and manage invoicing globally – from proposal to payment. The Platform includes access to 110 payment types, built-in world-class fraud prevention to protect sales and detailed analytics to help businesses grow. Learn more about all the ways BlueSnap can help your business at www.bluesnap.com