A new AvidXchange survey found late payments and widespread use of physical mail have presented major challenges in the finance industry during the pandemic.
In our survey of 700 business leaders, we asked how often their customers have paid them on time during the crisis. Less than one third (31 percent) of respondents said 75 percent or more of their customers have paid them on time.
Read more: Expert Insights for Peak Performance in 2021
The big takeaway? There’s been a lot of late paying going on during the pandemic.
Why does this matter? Well, because late payments lead to lost money, business disruptions and strained customer relationships. One late payment leads to another late payment, and invoice processing gets delayed along the way. It’s a chain reaction of bad scenarios.
Especially now in uncommonly tight market conditions, inefficiencies spread. Avoiding ineffective processes needs to be a high priority throughout the finance profession.
Late payments and snail mail go hand-in-hand
The pervasive late payment problem is connected to something else we learned in our survey. More than one third (37 percent) receive the bulk of their invoices and payments by snail mail instead of trusting accounts payable software or e-payment solutions.
Read more: The Risks of Paper Payments
All these late payment numbers, as you’d likely guess, have affected more than 50 percent of businesses during the pandemic, according to our research.
Translation?
Late invoices and payments were a major theme in 2020. While not surprising given the tough market situations, this problem needs to be fixed to boost business performance in 2021.
Cloud computing can remedy late payments
Our survey told us business leaders have a strong interest in investing in more digital technologies in 2021.
Momentum towards digital technology usage has picked up largely because of the urgent and widespread need to process payments and invoices online and more securely as fewer people work in offices and handle actual paper.
While many digital technologies will be used, one rose stood out as the most important cited by 35 percent: cloud computing. This makes sense considering more remote workers need to access their corporate networks faster, easier and more securely using cloud computing networks and databases.
Read more: Turbulent 2020 Signals Turning Points in Fintech Industry
What was somewhat unexpected was that blockchain did not rank high on respondents’ lists. Only eight percent said blockchain would be important innovation driver for their company in 2021, and a mere 4 percent said the technology is integral to their business.
This is noteworthy. A well-publicized and promising database technology, blockchain is believed to be useful for enabling easy, broad and secure sharing of the same trusted financial data among various parties.
But it’s just not catching on in the AP software market. Look for progress on this front in 2021 or further insights into why it’s not needed near-term for AP applications.
Modern hybrid workforce is here to stay
Having lived through 2020, you’re well aware of the paradigm shift towards widescale remote working by corporate employees. Our survey results show this phenomenon isn’t a one-year wonder.
Nearly two-thirds (63 percent) of respondents said their employees will work remotely in 2021. Here’s a more detailed breakdown:
- 7 percent said all employees will work from home all the time;
- 17 percent said their employees will do their jobs from home 75-99 percent of the time; and
- 39 percent said 50-75 percent of workers will get their work done at home.
Final thoughts
As a finance pro, 2021 will be a time to weigh whether to use bill payment software, automate AP processes and take full advantage of cloud computing and machine learning.
Industry headwinds continue to blow hard towards more widespread use of digital technologies. Now is the time seriously evaluate whether you can afford to continue using slow and error-prone manual processes.
The finance world is going full bore into digital. Take a fresh look at your business and seriously consider digitizing your entire set of operations.
Embrace a renewed sense of optimism and anticipation for the possibilities – especially payment and invoice efficiencies – that can fuel faster growth in your career, and for your company.