Digital payments contribute to a healthier balance sheet


Whether the wave of back office changes have been forced, rushed, or coming, the ongoing transition to digital business payments has allowed businesses of all sizes to appreciate the broader benefits their conversions have unleashed.

Comments from the survey show that a large majority of CFOs believe the biggest benefit of going digital is a healthier balance sheet, made possible by faster payments and the greater clarity they offer.

Matt Clark, president and COO at Corcentric, told PYMNTS’s Karen Webster in an interview that CFOs quickly realized that with all of the different payment terms and timing strategies they see from their customer base. , there is an opportunity to create new strategies. By better optimizing cash flow, they can put more working capital in the hands of their business.

“On the surface a lot of the things they do may seem like little dial tricks, but for big companies with bigger dollars at stake, it can be a game-changer,” Clark said.

Read more: Processing paper invoices costs businesses an average of $ 171,000 per year

Connect the dots and dollars

Clark said CFOs have learned that the entire transaction lifecycle needs to be optimized to determine what happens with the downstream payments that finalize each transaction. Previously, payments were almost considered an independent thing that happens at the very end of the transaction.

“They see the connection, or the elements that influence an upstream transaction, leading to more optimized strategies for how payments are made downstream, and they try to put them together in a more collaborative way,” Clark said.

This collaboration is something new, and it comes in pursuit of a healthier balance sheet. Before the pandemic, buyers and suppliers were largely doing their own thing, trying to implement solutions and strategies that benefited them without thinking about the companies they had to deal with, Clark said. But now, he explained, companies are increasingly realizing that they need to collaborate with those they do business with, throughout the transaction lifecycle, in order to create more desirable outcomes for them. two parts. The awareness has become so strong that when the two parties fail to agree on something, there is more willingness to seek out third parties, or intermediaries such as Corcentric, who can arbitrate to find agreeable solutions. Clark said.

Clark believes that intermediaries can play a key role in understanding the different motivations of buyers and suppliers and trying to reconcile them.

More like this: 30% of AP professionals struggle to process invoices efficiently

“Suppliers want to be paid faster and buyers want to pay more slowly. And then you get situations where a buyer might want to use a virtual card or some form of payment that the provider might have a hard time digesting, ”Clark said. “So companies go to a third party to do some sort of mediation and look for an opportunity where there could be a compromise. Then they can find a way for the supplier to get paid faster in exchange for accepting a certain payment method, while preserving the situation for buyers and not impacting them too much from a flow point of view. cash.

Unexpected benefits

It’s not just faster payments that make supplier balance sheets healthier. As they go digital, many companies have found that they are also gaining visibility, which allows them to know exactly when they will be paid. With increased visibility, it also becomes much easier to reconcile payments received with each transaction.

“A lot of progress has been made, particularly on the supplier side, in terms of visibility into how each payment will be made and where it fits in the lifecycle,” said Clark. “It has been a huge challenge in the past. Businesses would get a huge amount of money in their bank account, and while that was a good thing, they struggled to reconcile that with what the money was supposed to pay.

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However, not all businesses have been successful in optimizing their payment workflows. Clark said it’s because a lot of companies are approaching the problem the wrong way.

“Sometimes it’s attacked in a bit myopic way and it’s also kind of theoretical in terms of what they’re trying to do,” he said.

A much more thoughtful approach is needed, Clark said. He points out that most companies have no shortage of data that can be used to formulate a successful strategy. The first thing to do is understand what the current situation looks like in terms of paying customers, and what kinds of things would really make a difference. Then, it becomes possible to identify the results that can be achieved by improving certain metrics and move towards those results.

“I always recommend diagnosing before prescribing. First of all, let’s understand where you are today, ”said Clark. “Then we can determine the strategies we can use to achieve those results. This becomes the motivator to evolve into a strategy that will allow you to focus on the things that are really going to need to move the needle. “



On: Forty-seven percent of U.S. consumers avoid digital-only banks due to data security concerns, despite considerable interest in these services. In Digital Banking: The Brewing Battle For Where We Will Bank, PYMNTS surveyed over 2,200 consumers to reveal how digital-only banks can boost privacy and security while providing convenient services to meet this unmet demand.

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