Small Businesses Turn to Instant Payments as Ad Hoc Transactions Surge

Cash is king, and cash flow rules the day, especially for small businesses that might not have the wherewithal to weather macroeconomic shocks.

The PYMNTS Intelligence Money Mobility Tracker, “Immediate Impact: How SMBs Can Benefit From Instant Payments,” an Ingo Payments collaboration, found an uneven adoption of instant payments. More digitally forward industries, such as gaming and the gig economy, lead in real-time payment adoption. However, SMBs in sectors with less digital transformation often rely on paper checks or manual processes.

Ad hoc payments, which are nonrecurring, are also a contributor to small- to medium-sized businesses’ (SMBs’) payments received and are a growing share of accounts receivable for these companies. Ad hoc payments represent 55% of transactions and 69% of total accounts receivable volume in dollars. Since these payments can be unpredictable, getting them quickly can improve the recipients’ cash flow.

SMBs know that instant payments can have a positive impact on cash flow, and the Money Mobility report revealed that the share of SMBs that receive ad hoc payments through instant methods surged as measured year over year in 2024. About a third of SMBs opted to get ad hoc payments owed to them across instant payment rails, which was up from 20% in 2023. One-quarter of SMB receivers always opt for instant payments when available, while nearly half choose instant more than 75% of the time.

It should come as no surprise that forward-thinking industries moving to digital channels are at the vanguard of ad hoc-as-instant payment adoption. The report found a particular embrace of ad hoc instant payments in gaming and the gig economy, as these industries sell their services to larger customers but need cash in the coffers as soon as possible to pay freelancers or other employees (and want to keep them loyal). SMBs in these digitally forward industries use instant options 45% more than other industries.

The benefits of instant ad hoc payments received in the back office are especially advantageous to the smallest firms that have the most limited resources, as 73% of microbusinesses cited improved cash flow as their top reason for adopting instant payments.

These companies generate less than $100,000 in annual top lines, and 18% more companies in this demographic pointed to improved cash flow as their prime mover in 2024 than in 2023. The report revealed that 29% of SMBs with annual revenues between $5 million and $25 million cited the benefits of improved cash flow as among the top reasons they sought out this payment method.

Integration into new payment rails may be a challenge. Automation is critical, as only a quarter of SMBs depending mostly on manual AR processes receive ad hoc payments instantly, compared to 37% that automated their back-office processes.

The burdens are especially onerous on microbusinesses, as 44% are still reliant on manual processes. Integration concerns can be addressed by working with third-party providers to tap into those instant payment rails.

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