Not long ago, offering business customers payment method flexibility was something that was largely confined to innovative companies with well-resourced accounting departments.
But in the new landscape, created by the pandemic and the shift of B2B and consumer commerce to online channels, digital payment capabilities are becoming essential to participating in the global economy. Today, customers expect to be able to pay with credit cards, alternative payment methods such as PayPal, or account-to-account real-time payments. That has led vendors to adapt to meet the expectations of their customers.
In fact, 40% of large firms expect digitization of accounts receivable (AR) and accounts payable (AP) processes to improve customer satisfaction, according to The Strategic Role of the CFO, a PYMNTS and Versapay collaboration. The same is true of 32% of firms with revenues between $25 million and $100 million, and 38% of firms with revenues between $100 million and $1 billion.
“What we’re seeing is a desire for buyers to be more involved and hold more influence over payments processes, and in return, we’re seeing companies kickstarting projects that are expected to deliver major improvements in efficiency,” Versapay CEO Craig O’Neill told PYMNTS.
Beginning to Work Collaboratively
Indeed, 92% of small to medium-sized businesses (SMBs) are digitizing aspects of their AR and AP operations, PYMNTS found. These businesses are pursuing digitization to a similar degree as large companies with substantial technology teams and budgets.
These efforts are yielding immediate benefits for SMBs. For one thing, it allows them to accept a wider variety of payment methods and reduce their reliance on paper checks. Approximately two-thirds of SMBs that have digitized parts of their payment operations say it allowed them to increase their use of credit cards and regular ACH. A majority of SMBs also have increased their use of account-to-account real-time payments.
“To increase productivity and accelerate cash flow, SMBs need to address the widening disconnect between their accounting teams and their customers, and begin to work collaboratively by sharing access to the same information in real time, over the cloud,” O’Neill said.
Building Strong Customer Relationships
SMBs' motives for digitizing their AR and AP systems go well beyond individual payment methods, however. The vast majority — 93% — say they are seeking transformative changes that would allow them to gain new capabilities that have the potential to change how they do business.
Another nearly universal motivation for firms of all sizes is to benefit their customers and vendors. Over 95% of firms said that was a reason for digitizing AR/AP processes, ranking it No. 1 among a total of 11 motivations. SMBs view digitizing their operations as essential to having good relationships with their customers and vendors.
“No longer are payments and AR viewed predominantly as behind-the-scenes activities that must be done after contracts are finalized,” O’Neill concluded. “SMBs increasingly consider these functions — and their transformation to digital and collaborative experiences — to be crucial for building strong customer relationships, and all this has been accelerated by recent events.”