88% of Firms Say They Benefit From Faster Payments

Late payments are a common issue for businesses, especially small- to medium-sized businesses (SMBs) struggling with cash flow.

As payment delays persist, businesses are turning to faster payment solutions to ease financial pressure, improve operations and strengthen supplier relationships.

The PYMNTS Intelligence report “Need for Speed: Faster Payments Are Key to Businesses’ Financial Health” found that instant payments like real-time transfers can help companies manage cash flow, reduce delays and enhance B2B connections.

Late payments are impacting the financial health of businesses. The report revealed that 51% of suppliers said they receive payments after the due date. Consider that 57% of invoices are paid late, with 33% taking more than 90 days to settle. Nearly 30% of small business owners cited delayed payments as a top challenge, and in the professional services sector, the average payment time in 2023 was nearly 48 days, with about one-third of payments taking at least 60 days.

These delays cause disruptions in accounts receivable (AR). Businesses that allow more than 30 days for invoice payments are 57% more likely to face serious AR challenges. When payments take longer than 90 days, businesses struggle to meet operational expenses and may need to seek alternative, often costly, financing sources.

Real-time payment solutions, like same-day ACH transfers, are helping businesses improve cash flow and maintain stronger financial positions. According to the report, 88% of firms using faster payment options reported business growth, with SMBs benefiting from healthier balance sheets. Additionally, 54% of employees at mid-sized and large companies found real-time payments effective for overdue payments, while 32% said they enhance cash flow management.

The availability of these payment solutions is expanding. New collaborations between FinTechs like Jack Henry and Moov, as well as Adyen and InvoiceASAP, help SMBs accept digital payments, including same-day fund transfers. These partnerships are improving cash flow for small businesses, offering quicker, fee-free transactions that improve financial health.

Faster payments help maintain strong business relationships. Instant payments not only help improve operational efficiency but also build trust and goodwill between buyers and suppliers. According to the report, two-thirds of SMBs are more likely to continue doing business with companies offering instant payments. Additionally, 89% of large retailers, 91% of manufacturers and 80% of insurers reported that offering real-time payments enhanced their relationships with suppliers.

Across the globe, real-time payments are becoming more prevalent. For example, Visa’s partnership with Revolut allows businesses to transfer funds across 78 countries in less than 30 minutes, supporting seamless cross-border transactions. As companies recognize the benefits of faster payments, adopting these solutions can help them improve their cash flow and strengthen their business relationships.

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