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Executive Summary
In a world of technology advancements like the cloud, mobility, and internet of things (IoT), businesses are constantly evolving to add value to their customers. Recurring revenue models, like subscriptions or consumption-based models, are becoming key to this ongoing business evolution. For recurring B2B payments, the manual, slow, and expensive processes of traditional payments do not work. The lack of process automation and integration between various payment technologies causes inefficiencies and human error, and the increasing complexity of the payments landscape results in lost customers, payment failures, high costs, and, in turn, lower revenue impacting the wider business.
GoCardless commissioned Forrester Consulting to evaluate the state
of recurring payments across the globe. To explore this topic, Forrester conducted an online survey with 700 payment decision makers in B2B and B2C, or B2B-only firms. We found that recurring B2B payments are pushing firms to modernize their payments technology and update their payments operations.
KEY FINDINGS
› Payment methods for B2C and B2B firms vary, complicating the payments landscape. Modern business is changing the way consumers make B2B and B2C payments. As more merchants change their business models, sell in more countries, and accept more payment methods, the payment landscape has become convoluted. Firms that cater to both consumers and businesses often must support wildly different payments flows. Consumers primarily use digital wallets, credit cards and bank debit (e.g., ACH debit, Bacs Direct Debit, SEPA Direct Debit), while business buyers favor bank debit and bank wire transfers for recurring purchases.
› Operationalissuesandpaymentfailuresareongoinghurdlesforall firms. Four out of five respondents indicated that it takes their firm more than a month to receive payments and that the average days sales outstanding (DSO) is 20 days or more, which has a tremendous impact on cash flow and revenue and prohibits company growth. Half of all respondents said that in the past 12 months alone, their firm experienced a payment failure for 7% of its payments. Failed payments are not only costly for businesses to collect, but they also impact customer relationships and increase the risk of bad debt and customer churn. Payments are high leverage with many downstream effects across a business. More than half of surveyed payment leaders said their firm’s revenue and profitability decrease because of failed payments.
› Firmsrecognizetheimportanceofrecurringpaymentsolutionsto optimize their payments strategy. Nearly 60% of respondents said their firm is planning to invest in or expand/upgrade investment in recurring payment providers. Organizations are responding to their customers’ demands by adopting recurring payment solutions to deliver exceptional service, but also to drive strategic growth. As such, they expect numerous benefits, including improved payment success, efficiency, and cash flow, customer retention and satisfaction, growth and facilitation of international expansion, and meeting compliance requirements.
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