Manual processes: 67% more time on late payments


Paper-based payment processes are slow and expensive, and their use to collect debts further exacerbates existing payment problems. These cumbersome manual processes hamper the speed and efficiency of invoicing, customer credit checks, and receivables collection and reconciliation, all resulting in longer days of unpaid sales (DSO).

For example, according to the B2B Payments Innovation Readiness Playbook, a collaboration between PYMNTS and American Express, companies that rely on manual processes take 67% more time to track late payments.

Additionally, businesses that rely on manual accounts receivable (AR) processes have an average DSO 30% longer than businesses that rely on medium or high levels of automated processes to collect debts. This has a significant impact on their ability to maintain their cash flow and maintain their operational activities.

A move away from manual processes

The good news, however, is that two-thirds of businesses are aware of these issues and are actively moving away from manual processes, planning instead to adopt new technology solutions to upgrade their AR systems for faster, more processing. efficiency and lower costs.

PYMNTS research confirms that companies looking to automation technologies to help with AR functions such as applying cash, accepting payments, collections, customer credit checks and reconciliation are in a better position to adapt more easily to changing market dynamics.

Businesses that use a high degree of automation to manage RA processes naturally benefit from a shorter DSO because they don’t have to face the challenges associated with manually managing RA processes. The DSO for a company with little or no technology implementation for AR management is 52 days, which is 12 days longer than the DSO for companies with moderately to heavily automated AR processes.

The benefits of process automation

Businesses looking to reduce their DSO will benefit from automating processes such as tracking collection activity and tracking late payments. New technologies can help businesses perform these crucial AR functions in an agile and effortless manner.

To start automating their processes to overcome cash flow challenges, finance managers need to eliminate manual processes, ditch physical invoices, embrace automation for flexible credit terms, use DSO as a way to assess automation and prioritize their digital transformation.

Automation doesn’t have to be all or nothing to move away from manual processes; businesses can prioritize how they deal with their biggest payment issues so they can launch their digital journey at their own pace.

On this journey, a great indicator of a highly automated AR process is a short DSO cycle. The benefits of this achievement will be tangible, as companies that succeed in reducing their DSOs are likely to improve their cash flow and long-term success.

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NEW PYMNTS DATA: 2021 HOLIDAY SHOPPING OUTLOOK

On: It’s almost time for the holiday shopping season, and nearly 90% of US consumers plan to do at least some of their purchases online, 13% more than in 2020. The 2021 Holiday Shopping Outlook, PYMNTS surveyed over 3,600 consumers to find out more about what drives online sales this holiday season and the impact of product availability and personalized rewards on merchant preferences.


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