Digitization of payments for a healthy balance sheet

Chief Financial Officers (CFOs) invest in the digitization of payments because they believe it is an integral part of building and maintaining healthy balance sheets. For different CFOs, this can mean more working capital, streamlined Accounts Receivable (AR) and Accounts Payable (AP) processes, or better customer and partner satisfaction.

In fact, 59% of CFOs say payments digitization is key to a healthy balance sheet, according to Business Payments Digitization, a PYMNTS and Corcentric collaboration based on a survey of 400 CFOs.

Get the report: Digitization of Corporate Payments: A Path to a Better Balance Sheet

The bigger the company, the more likely its CEO is to say that he sees digitization as “very” or “extremely” important in improving the balance sheet. Among the smallest companies included in the survey – those with revenues between $ 400 million and $ 750 million – 50% of CEOs said digitization is key. Among the largest companies – those with revenues between $ 1.5 billion and $ 2 billion – 74% of CEOs place the same importance on digitization.

Optimization of AR and AP processes

Factors contributing to these healthy balance sheets include greater working capital, streamlined AR and AP processes, and better customer and partner satisfaction, CFOs said.

Optimization of AR and AP processes is the first and most important part of a healthy balance sheet, according to CFOs, 96% of them agreeing that optimization of AR and AP is “very” or “extremely” important to maintain their healthy balance sheet. . It follows that these companies would also highlight the importance of digitalization, which can help speed up and streamline inbound and outbound payment flows.

Investments in assets and sources of capital or working capital are also widely seen as key elements of a healthy balance sheet. Ninety percent of CFOs see investing in assets as essential, while 53% say the same about working capital. Working capital is especially important for large companies. Sixty-one percent of CFOs at larger companies said increasing working capital is critical to maintaining healthy balance sheets, compared to 46% of those at smaller companies.

An increased ability to attract and retain customers is another of the top reasons CFOs give for accelerating digitization. Thirty-six percent of CFOs surveyed said it was a reason to accelerate their efforts to digitize payments.

Citing 4.5 Reasons for Accelerated Digitization

There is no single reason why companies want to go digital. Countless interrelated factors have driven digitization forward, with CFOs pointing to many ways digitization could improve their businesses. CFOs cited an average of 4.5 reasons for accelerating digitization, ranging from meeting supplier expectations to improving payment security and improving communication with suppliers.

With these many benefits, it’s no wonder that 71% of CFOs have increased their use of digital payments since the start of the pandemic. Almost all of the businesses included in the survey said they make and receive cash or check payments less often and receive digital payments more often than they were before March 2020.

Digital payments by credit card (up 85%), direct deposit (up 71%) and PayPal (up 62%).

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