There has been a fair amount of anecdotal evidence that digitization of financial operations has accelerated since March 2020, when a fair amount of panic set in, which included how to manage payments in a WFH environment, especially challenging for those companies with persistent reliance upon traditional analog processes and check payments. So the chit chat has been that digitization has become a top priority, and a few surveys here and there back that up, although specifics on actual percentage changes are hard to come by. In a piece posted at Supply & Demand Chain Executive, the president of a receivables fintech covers this and provides some AFP numbers around the declining use of checks as well.
‘It has been two years since the onset of the COVID-19 pandemic, which in many ways signaled the beginning of the business world’s race to embrace digitization. In the B2B space, the need to adapt to remote work and other external challenges like the mail delays and an uncertain economy required suppliers and buyers to accelerate the digital transformation of their payments processes. This was a considerable task, given some 40% of B2B payments were still made by paper check at the time, but it was also a move that most businesses knew was non-negotiable as late payments, worsening DSO and the slow movement of cash threatened their overall health like never before.’
Digitization for Efficient Processing Environments
The author then gets into some of the things that have been done, including results from a self-conducted survey, and what remains to happen for more optimal results on the receivables side of operations. We have been covering this through member research as well, particularly the need for continued integration between and across solutions in financial operations. Things like automated payments networks, greater integration with ERPs and fintech emergence on payables and receivables options have all contributed to more efficient processing environments. However, it seems that some of the perceived gains may be over rated and more work has to be done. Worth a quick read to get some industry perspective.
‘For this future to be realized, organizations need to reexamine what the term ‘modernization’ means to them. This is because there are several contrary indicators suggesting they are not as modernized as they perceive. For example, 2021 research found that 86% of AR practitioners rate their department as very or somewhat modernized. Yet, over 50% admit they don’t have real-time integrations with their ERP systems, nor do they have automated integration with their customers’ accounts payable (AP) procure-to-pay platforms. Furthermore, more than 60% say the majority of their payments or invoices are not yet digital.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.
