Checks are a barrier to digitizing B2B payments


Despite the long-standing quest to digitize B2B payments, there is still a lot of work to be done.

There are many reasons why the status quo remains stubbornly unsolvable. The crux of the matter is the question of pain versus gain. Digitization has undeniable advantages, but it also entails undeniable costs. The challenge is to manipulate the variables to achieve a positive return on investment.

Track game status

Data from the “Innovating B2B Retail Payments Playbook,” a collaboration between PYMNTS and MSTS, now TreviPay, showed that paper checks remain the most common way for businesses to pay themselves. Just under 81% of businesses still process paper checks in their Accounts Payable (AP) and Accounts Receivable (AR) functions.

Automated Clearing House (ACH) payments are used by just under 64% of businesses. So, about a third of businesses have yet to even adopt this most basic and oldest form of digital payment.

Credit and debit cards finish a distant third in the race to escape the paper chase. Only 48.2% of businesses use credit cards to make payments and only 19.2% use debit cards.

Why so slow?

There are several reasons why so few businesses use these digital payment methods. One is their fees, which are a significant cost, especially for high-priced items. Generally, recipients are unwilling to absorb these costs. Payers are also reluctant to incur them.

There are also control issues. Company checks are easier for AP personnel to control with multiple signature requirements and other process safeguards. One of the reasons the pandemic has been a catalyst for change is the prospect of PA staff storing company checks in home offices. But now that businesses have returned to the office on at least a hybrid basis, many are finding it too easy to revert to old, familiar ways.

These procedures often involve elaborate, non-standard approval processes that are difficult to automate. For example, 63.1% of companies require approval from two to five people. Another 10.8% of businesses require even more approvals. These processes take an average of 14.1 business days.

Cost and time

Despite these hurdles, there are benefits to be had from automating PA/AR.

  • Reduced expenses. Automated invoice processing is almost 80% cheaper than paper invoice processing. Specifically, the average paper invoice costs $10.08 to process, while the average automated invoice only costs $2.18 to process.
  • Faster processing. Automated invoice processing is 56% faster than paper invoice processing. It takes businesses 8.3 days to process the average paper invoice, while the average automated invoice only takes 2.9 days.

Buyers are incentivized to improve supplier satisfaction through prompt payment in a supply chain environment, which creates a sort of seller’s market for certain goods and services amid shortages and delays.

Clarity and certainty regarding the timing of payments is another benefit of digitization. As things stand, corporate cash managers find the unpredictability of older B2B payment methods even more frustrating and potentially damaging than delay.

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About: Results from PYMNTS’ new study, “The Super App Shift: How Consumers Want To Save, Shop And Spend In The Connected Economy,” a collaboration with PayPal, analyzed responses from 9,904 consumers in Australia, Germany, UK and USA. and showed strong demand for one super multi-functional app rather than using dozens of individual apps.


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