59% of CFOs Say Payments Digitization Is Key to a Healthy Balance Sheet.

By PYMNTS



Chief financial officers (CFOs) are investing in payments digitization because they believe it is integral to building and keeping healthy balance sheets. For different CFOs, that may mean greater working capital, streamlined accounts receivable (AR) and accounts payable (AP) processes, or improved customer and partner satisfaction. In fact, 59% of CFOs say payments digitization is key to a healthy balance sheet, according to the Business Payments Digitization report, a PYMNTS and Corcentric collaboration based on a survey of 400 CFOs.

The larger the firm, the more likely its CEO is to say that they consider digitization to be “very” or “extremely” important to improving balance sheets. Among the smallest firms included in the survey — those with revenue between $400 million and $750 million — 50% of the CEOs said digitization is key. Among the largest firms — those with revenue between $1.5 billion and $2 billion — 74% of the CEOs place that much importance on digitization.

Optimizing AR and AP Processes Among the factors contributing to those healthy balance sheets are greater working capital, streamlined AR and AP processes, and improved customer and partner satisfaction, CFOs said.

Having optimized AR and AP processes is the first and most important component of a healthy balance sheet, according to the CFOs, with 96% of them believing that AR and AP optimization is “very” or “extremely” important to keeping their balance sheets healthy. It follows that these firms would also emphasize the importance of digitization, which can help accelerate and streamline inbound and outbound payment flows.

Asset investments and sources of capital or working capital are also widely considered to be key components of healthy balance sheets. Ninety percent of CFOs see asset investment as critical, while 53% say the same of working capital. Working capital is especially important to larger firms. Sixty-one percent of CFOs at the largest firms said that boosting working capital is critical to maintaining healthy balance sheets, compared to 46% of those at the smallest firms.

An enhanced ability to attract and retain customers is another one of the CFOs’ top reasons for fast-tracking digitization. Thirty-six percent of the CFOs surveyed said that is a reason for accelerating their payments digitization efforts.

Citing 4.5 Reasons for Fast-Tracking Digitization There is no single reason explaining firms’ drive to digitize. Countless interlocking factors have pushed digitization ahead, with CFOs reporting many ways that digitization could improve their businesses. CFOs cited an average of 4.5 reasons that they fast-tracked digitization, ranging from meeting supplier expectations to enhancing payment security and improving communication with vendors.

With these many benefits, it’s no wonder that 71% of CFOs have increased their use of digital payments since the pandemic’s onset. Nearly all firms included in the survey reported that they are making and receiving payments via cash or checks less often and receiving digital payments more often than they were before March 2020.

Among the payment types that have seen the biggest uptick in usage are credit card-enabled digital payments ( up 85%), direct deposit (up 71%) and PayPal (up 62%).