The payments landscape is changing. Standards that used to be considered good enough are no longer cutting it in today’s challenging economic conditions. Many businesses are leaving money on the table due to inefficient accounts receivable practices and outdated payment collection operations.

If you feel your AR operations could be running more smoothly, you’re not alone. 77% of CFOs’ accounting teams are falling behind on collecting accounts receivable. But why?

They’re not keeping up with modern technology for optimizing and automating AR collection. This payments automation article by Payments said it well, “As many as 40% of B2B payments are still made with paper checks, and 81% of companies still pay other enterprises through those paper-based channels. This manual and paper-driven nature of B2B payment processes not only hinders efficiency and inhibits a smooth transactional experience, but it could also be costing firms repeat business from customers who are being provided with more seamless engagements from other suppliers.”

We’ve embraced automation and digital technology in so many areas of our lives. So in 2024, it’s time to leverage that technology to improve key accounting metrics, like cost conversion cycle, days sales outstanding, and more.

Challenges are mounting for the office of the CFO

Today’s CFOs are faced with a nearly impossible task and are under mounting pressure to perform. With limited budget and waning resources, it’s beginning to seem like CFOs are expected to be miracle workers.

Improving cash flow, by getting paid faster and keeping money in the bank account longer is an important outcome for CFOs. This is all while being expected to reduce operational costs and streamline financial ops without scaling headcount. 

CFOs must work to foster positive customer relationships, which is tough to do when the accounting team is mainly interacting with customers about money-related issues. They need to provide a streamlined experience for customers interacting with the AR team and limit disputes from manual data entry. 72% of accounting executives say their AR team isn’t customer oriented enough. There’s work to be done here.

Finally, CFOs are also contending with operational inefficiencies, finding ways to ramp up the pace of the company’s AR team without increasing headcount. They are expected to find opportunities for innovation to drive their team forward. 

According to Versapay, 92% of survey respondents believe that to reach optimal company performance, every function needs to digitize. CFOs need to identify and source software that will help solve these challenges in their business.

The newest B2B payments trend: Accounts receivable automation

Accounts receivable automation software can help CFOs overcome many of the challenges we discussed above. 

Going “all paper” is the only way businesses avoid technology and automation. Unless your organization makes a point of staying offline, it will need to embrace automation as a matter of doing business. Now is the time to get familiar with digital payments, accounts receivables automation and related processes to help your company prepare for the future.

Key features of accounts receivable automation software are:

  • Secure payment information storage
  • Scheduled pull payments
  • Automated dunning
  • Automated payment expiry update reminders
  • Rich integrations with existing accounting systems for automatic updates and reconciliation
  • On-demand customer payment portal to make and manage payments

Payment automation isn’t just a B2B payments trend for 2024, it’s here to stay. The B2B payment automation market is expected to double to about $2 billion by 2030.

According to a recent survey, the main decision-making factors inspiring firms to automate their AR and AP processes are:

  1. Desire to save time
  2. Increase in mistakes that automation would have caught
  3. Concerns about fraudulent invoices
  4. Desire to reduce repetitive, manual work

The takeaway here is that AR automation can help solve a multitude of business challenges for CFOs, packing huge bang for its buck.

How the B2B Payments Trend: AR automation can deliver real business results

CFOs who are ahead of the curve and have already implemented payments automation into their operations are experiencing measurable business results.

Of firms that fully automated all processes:

  • 94.7% report accurate, efficient and streamlined processes
  • 84.2% report increased savings, cash flow and grow
  • 52.6% report better data visibility and insight
  • 57.9% report easier compliance and monitoring

(source)

While albeit less, those who only implemented partial automations still experienced benefits:

  • 84% report accurate, efficient and streamlined processes
  • 72.3% report increased savings, cash flow and grow
  • 39.7% report better data visibility and insight
  • 33.3% report easier compliance and monitoring

(source)

This data shows that you don’t have to boil the ocean. You can slowly introduce automation in a prioritized, manageable and affordable way and still produce great business results. 

What’s holding CFOs back from adopting B2B payments automation technology

If automation is so great, why haven’t all CFOs jumped on the bandwagon yet? Change is never easy, especially when it involves giving more responsibility to “computers.” We’re still hardwired by nature to be skeptical of technology.

Cost is the number one blocker for companies considering automation. Barriers to entry exist for 96% of firms, mostly in the way of big implementation costs. 

Another common reason for hesitation is related to security. Almost half of firms worry about the safety of data and funds. Additionally, 37% of firms are hesitant to adopt automation due to how much time it could take to adapt the technology. (source)

How CFOs should prioritize B2B payments for automation

Going fully automated immediately may prove to be challenging for many organizations. It could be a shock to both your customers and team. As the data demonstrated above, you can still get some solid benefits from automating parts of your payments process or only certain payments.

Not all instances can or should be automated fully. The power of automation is that it frees up your team to work on more labor-intensive, complex solutions that drive business value, save revenue, and strengthen business relationships. We suggest starting with more straight-forward payments that make easy candidates for automation.

Here’s how many firms are choosing to prioritize which payments to automate:

  1. Payments of regular amounts
  2. Payments occurring at regular intervals
  3. Payments involving greater manual calculations


(source)

Embracing B2B payment trends: What CFOs should look for in AR automation software

If you’re ready to take the plunge and explore your accounts receivable automation software options, what should you look for?

  1. Powerful integrations that work with and improve upon your existing software
  2. Usage-based pricing that can help you weather the ebbs and flows of your business and the economy
  3. Payment Portals that give your customers the power to make payments and manage payments themselves
  4. Automated dunning features, like payment reminders emails and non-payment follow ups 

Notch Financial can help you boost profit with easy and on-time payments. Learn more about our payment automation software.