More and more companies are turning to digital account-to-account (A2A) payment methods to streamline business-to-business (B2B) transactions – the latest pioneer on the checklist is Salesforce, reveals a report published on 1st of March 2021. This method enables funds to be transferred directly from buyers’ bank accounts to suppliers’. The accompanying payments data from senders’ enterprise resource planning (ERP) applications flows to the recipients. Designing more convenient experiences helps in fostering warmer buyer-supplier relationships.
The “Next-Gen AR and AP Digitization Report: How A2A Payment Automation Can Help Improve Supplier Cash Flow,” released in March examines businesses’ cash flow and late payment pains as well as how B2B A2A payment methods can effectively address these problems.
According to the report, 62% of businesses reduced the total number of days employed in sales by adopting AR technology.
The technology is a boon for suppliers who have grown tired of waiting for paper checks to arrive. It also assists corporate clients aggravated by the fees involved in canceling and reissuing checks that have been tangled in the mails and are looking for simpler ways to transact with each other.
The report also substantiates that around the digital payments space 49% of the businesses have opted for AR technology that has led to improved collections.
Across Western Europe, late payments are the top concern for suppliers. According to a study, nearly half of the invoices in the region have passed their due dates. Thirty-eight percent of the companies stated that they were concerned that they wouldn’t be able to collect the overdue payments. Many firms facing payment delays are unable to pay their suppliers on time and thus these problems easily operate in the loop.
Businesses in the United States are also entangled in such matters and possess the desire for quicker, easier payment processes driven by a shift towards expediting more transactions over the automated clearing house (ACH) network. Last year, for example, witnessed an 11% increase in B2B transactions via ACH compared to the 2019 levels.
US firms can send payments at greater speeds by employing real-time payment systems. The Federal Reserve plans to debt its FedNow instant payments system and has been relentlessly working to refine the offering.
According to Pascal Yammine, general manager and senior vice president of business software solutions provider Salesforce Revenue Cloud suppliers are faced with cash flow interruptions more often during the pandemic and sluggish client payments exacerbate this financial strain. Paper check-based payments are likely to cause problems and can be quite cumbersome to retrieve from offices while employees are working from home.
During such difficult times, Salesforce’s announcement to embrace A2A payments will ease the cash fluidity in the marketplace.
The total sales period tends to be on an average of 47 days long for firms that haven’t invested in any sort of automation. (Source: Next-Gen AR & AP Digitization Report: How A2A Payment Automation Can Help Improve Supplier Cash Flow)
The statistics substantiate that late payments are on the top of mind for suppliers in western Europe where nearly half of the invoices in the region past their due dates. The deep dive examines businesses’ late payment struggles and authenticate that sending payments over the same-day ACH and Real-Time Payments (RTP) networks can help reduce such frictions.
Salesforce is the world’s #1 CRM platform for sharing news, events, and innovation that the companies need. The company FOUNDED IN 1996 specializes in enterprise cloud computing and customer relationship management (CRM) and is headquartered in San Francisco, CA.
The Next-Gen AR & AP Digitization Report is a collaborative endeavor of Transcard collaboration and PYMNTS. The report explores how businesses have been digitizing payments during the pandemic and how leveraging quick account-to-account payment methods enable them to improve the cash fluidity and transact smoothly.