Dive Brief:

• Most CFOs (71%) have sped up adoption of digital payments during the pandemic, aiming to streamline accounts receivable/accounts payable, bolster company balance sheets, and satisfy customers and vendors, according to a survey by payments software company Corcentric and trade publication PYMNTS.com.
• Eighty-four percent of CFOs said digitizing payments has improved working capital, and 91% have achieved gains in efficiency, according to a report on the responses from 400 CFOs in five industries.
• “There is no single reason explaining firms’ drive to digitize,” the report said, noting “countless interlocking factors pushed digitization ahead” after the outbreak of COVID-19 in March 2020, including cost cutting, competitive pressures, enhancing cash flow and working capital, and providing customers and vendors with greater security and transparency.

Dive Insight:

Since the start of the pandemic, card-enabled payments such as those made through a digital wallet or supplier portal have increased more than any other payment type, according to the survey report. Eighty-five percent of CFOs say their companies have stepped up such payments.

In contrast, 71% of CFOs have increased the use of direct deposit, and 62% more frequently use PayPal, according to the survey report.

Meanwhile, paper-based payments are declining among CFOs surveyed, with 53% saying their companies are sending fewer checks and cash and 87% reporting that they are receiving fewer such payments.

The appreciation CFOs have for the balance-sheet benefits from digital payments varies depending on the size of their company. Only half of CFOs at companies with annual revenues ranging from $400 million to $750 million believe that digitization of payments is “very” or “extremely” important for improving balance sheets. In contrast, 74% of CFO at companies with yearly sales of $1.5 billion to $2 billion recognize significant benefits to balance sheets from digital payments.

The market for digital payments is booming. For example, card network giant Mastercard, with 231 million cards in circulation, expects its core card business to grow annually about 9% during the next few years, the company said Wednesday in a call with analysts.

The credit card market currently makes up just $45 trillion of the $255 trillion in total payments, which also includes B2B accounts payable, commercial point of sale, and disbursements and remittances, Mastercard said.

CFOs consider streamlining accounts receivable and accounts payable as the most important step in ensuring a solid balance sheet. They also identify fraud reduction, optimizing asset investment, and sources of capital or working capital as essential for a healthy balance sheet.

CFOs at finance and insurance firms value payments digitization more than their counterparts in other industries, with 71% of them saying that digitization is “very” or “extremely” important to improving their balance sheets.

The survey, conducted from mid-August to mid-September, focused on CFOs in manufacturing, finance, retail, transportation and healthcare.