The movement of money is the lifeblood of any business, but the current state of payment operations shows that companies are struggling to make them simple, fast and error-free.
According to new Harris Poll research, over 8 in 10 companies (84%)\ face payment operations problems such as slow payments, payment failures, and data quality errors, while 61% say managing payments takes too long.
All of this causes finance teams to waste time investigating and fixing payment issues versus working on higher-value strategic projects. Also, almost 6 in 10 (58%) of senior finance decision makers say it is hard to get a complete financial view of their company with their current payment ops system.
Payment operations pain points
Payment operations exist in virtually every company but, before this survey, had never been studied comprehensively.
Broadly defined, payment ops means the management of the entire cycle of money movement. Every day, companies handle millions of high-value transactions, each of which involves initiating payments, setting up approval processes, tracking and attributing sent and received funds, resolving payment failures and returns, reconciling transactions to bank statements, and booking payments to the general ledger.
In a perfect world, payment ops would run like electricity, smoothly and quietly in the background. Instead, the survey shows companies are struggling with payment ops and this costs them time and money. The survey, conducted in August and September, included 300 respondents from companies with 500 to 5000 employees. Other survey highlights:
- One-third of payment operations (34%) are still manual even at these relatively large companies.
Manual payment ops is the foundation for operational debt because delays across the payment lifecycle compound quickly. Manual inbound payments often take longer to process than automated ones. If the reconciliation process is also manual, that adds more time to matching bank statements with transactions in ledgers. Manual processes are also prone to human error.
- 51% of financial leaders reported that their teams waste a lot of time, on average eight hours a week, on payment ops issues such as slow payments, payment errors and poor reconciliation processes. This means those decision makers cannot spend more time on higher value strategic work.
- Nearly half of companies surveyed have five or more bank accounts. The complexity of payment ops scales with the number of bank accounts because all payment ops tasks are multiplied for each bank. Companies have to navigate each bank’s portal, offerings and disparate payment timings for each rail. Combined with manual processes, this can quickly become an outsized operational problem.
The challenges to companies are only getting more intense as payment complexity increases as businesses become more global and add new payment methods, asserts the venture capital firm, Andreessen Horowitz.
Modernizing payment ops
Unlike consumer payments, business payments have lagged in terms of innovation. Instead, companies continue to use legacy technologies and cobbled together systems.
As a result, companies are suffering the impacts of inefficient payment ops in terms of employee frustration, reduced productivity, greater financial risk and even lost revenue, survey respondents said.
With better software to manage day-to-day finance workflows, CFOs will become more strategic, Andreessen Horowitz maintains.
Investing in upgrades
Companies are recognizing the need for upgrading payment ops. Virtually all financial decision makers surveyed (99%) think upgrades to payment ops would be helpful. More than 8 in 10, (81%) said modernizing payment ops would fuel increased speed, flexibility, and transparency with money movement.
Also, 88% said automation would allow finance teams to spend more time on strategic matters. With such investment, companies will have more time to focus on building their businesses and growing faster.