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 Corcentric and 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 greater security and transparency.

Dive Insight:

The market for digital payments is booming. For example, Mastercard, with 231 million cards in circulation, expects its core card business to annually grow 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.

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 those surveyed, with 53% of CFOs saying their companies are sending fewer checks and cash and 87% of respondents 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.

CFOs consider streamlining AR and AP as the most important step in ensuring a solid balance sheet. They also identify fraud reduction, and 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.