A Path Toward Payment Improvements

January 12, 2021 Lynn Larson

Change the mindset, not just the calendar. See 11 factors for success in improving your organization’s payments strategy in 2021.

The sweet and sour of B2B payments.

February 22, 2016 Lynn Larson

In food and drink, a delectable balance of sweet and sour is desirable. Not so in business-to-business (B2B) payments, as the sour represents things like continued prominence of checks and costly manual processes. With so many sweet options available today, such as technology advancements and growing electronic payments, it is time to turn the sour lemons into lemonade. The sweet are getting sweeter and, unfortunately, the sour might never transform. I saw it all this month while analyzing responses to AP Now’s 2016 Payment Survey. Here is a sampling of what I learned.

Preliminary Payment Survey Results

A decent percentage of organizations now use checks for less than half of their B2B payments (sweet!) and they all aspire to drive their success further. Sadly, for a larger percentage of organizations, checks still comprise at least 75% of payments. (The rest are in between.) Among these heavy check users, nearly half are satisfied as-is.

As for Commercial Card usage, sweet and sour again emerge. Most organizations have Purchasing Card programs in place and the prevalence of electronic accounts payable (EAP) solutions is in double digits. However, strategies for increasing card usage are generally lacking. This might be a reason for the nearly equal split between those reporting little to no change in card usage in 2015 (compared to previous years) and those noting higher usage.

For more information about the research, please refer to the press release from AP Now.

Where are We Headed and Why?

In the past year, I have had the opportunity to analyze data from a few different industry surveys. I’m sure I’m not alone in seeing a widening gap between organizations who are basically building sweet state-of-the art lemonade stands with efficient purchase-to-pay practices and those who have failed to progress. Why?

Sweeten a sour payment strategy through greater use of technology and electronic payments.

Survey results have shown that success is not limited to the largest organizations, so the difference could be knowledge. A lack thereof also likely fuels resistance to change. Through the AP Now survey, I saw firsthand that many organizations lack internal knowledge, as in their internal payments-related costs. For tips, see last month’s post on rating your payments strategy and building or refining a metrics plan. Internal knowledge is a good starting point, serving as the catalyst for change.

Then there is industry knowledge. Take advantage of the multitude of options, such as subscriptions to content, research surveys, webinars, and provider technology demonstrations. Of course you cannot do and read everything, but you will gain exposure to what is possible.

About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more…

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Hair-raising data on checks.

August 24, 2015 Lynn Larson

Like everyone else in our industry, I have known that check usage for business-to-business (B2B) payments has remained high, but a recent report published by PayStream Advisors goes a step further to help explain why. As a contributing analyst to the report, I was surprised to discover that survey respondents perceive checks as best in four of 10 attributes, compared to other payment methods. For example, 55% rated checks as the option offering the “most complete remittance information.” As the report notes, favorable views of checks influence payment strategy.

The Prevalence of Checks

Last year, the AP Automation Study by the Institute of Financial Operations (IFO) revealed 52% of survey respondents use checks for at least half of their B2B payments and 32% use checks for at least 75%. The PayStream survey results are even higher:

The report observes, “Although heavy check users are more challenged by high payment processing costs than the other organizations, they are also less likely to change their payment management strategies; the majority of heavy check users have not taken actions to decrease checks and increase electronic payments in the last two years.” Among heavy check users, 40% have taken actions to decrease checks (they are obviously falling short) compared to 81% of the remaining organizations. Indeed, concerted efforts are necessary to reduce checks, including implementing (and enforcing!) specific payment policies, and educating internal staff and suppliers about the benefits of electronic payments.

Obtain the PayStream Report

The PayStream Advisors’ report, Electronic Payments and Card Solutions in 2015: Perceptions, Realities and Strategies, features:

trends in B2B payment method usage
the status of Commercial Cards
influential factors for payment strategies
a look into payment solution providers

The report is available from PayStream Advisors.

Where Does Your Organization Stand?

Is your organization among the heavy check users? My January 5, 2015, blog post on reappraising the value of card payments included three key questions for organizations to address about their B2B payment strategies.

What will drive your organization to reduce its check volume by adopting more card payments?
What percentage of B2B payments do checks comprise?
What is your card payments opportunity?

As you seek increased buy-in for expanded card usage, it can help to first understand what is behind any resistance. Many factors influence people’s perceptions about Commercial Card programs: previous experiences, lack of knowledge, media reports, and resistance to/fear of change. To combat misperceptions, the best approach is to avoid emotional arguments and stick to the facts.

Face your payment strategy pitfalls head on and embark on some clean up.

Available Education

For those interested in a broad introduction of Purchasing Cards and electronic payables, both of which are key ways to diversify a payments strategy, consider the on-demand course I created for Proformative Academy, an online professional development platform for CFOs and similar.