By Nikhita Hyett, Managing Director, Europe at BlueSnap

With the easing of lockdown restrictions on the horizon, there’s cautious optimism among the finance community. But the UK’s rebound from COVID-19 could be in jeopardy, as outdated payment processes and legacy systems threaten future growth.

According to the recent Progressing Payments Report from BlueSnap, more than 80% of B2B executives in the UK say the future of their company is threatened by late payments – a direct result of outdated accounts receivable (AR) processes.

With businesses continuing to rely on laborious, time intensive and often manual payment technologies, firms are actively damaging their cash flow and risk hampering recovery efforts in the wake of the pandemic.

Legacy payments and systems

The research reveals that traditional payment methods such as cash and paper cheque are still commonly accepted among B2B firms. A practice which has been exposed as a major weakness over the last 12 months.

Those B2B organisations that accept paper cheques in their AR processes have been disproportionately impacted by the fallout from COVID-19, due to their reliance on this burdensome payment method.

Some firms have suffered delays in processing cheque payments due to extended timelines for collecting invoices and cheques that arrive in the post. Meanwhile, others have been unable to process cheques at all, as the business community has had to adapt to remote working during the pandemic.

Manual processes also remain in rotation, with many businesses still relying on postal services and even fax to send invoices. The result is more time spent managing the lifecycle of individual payments and a workforce that’s unable to reach its full potential.

A failure to innovate

Senior decision makers estimate that, on average, 11 working hours are spent managing a single invoice alone, with up to 15 people often involved in this process. Some organisations report even higher figures, demonstrating that laborious and time-consuming payments systems remain the norm for both vendors and their customers within B2B settings.

This is a far cry from the B2C arena, whereby payments innovation is not only welcomed but expected. While the technology to automate payment processes is now widely available for B2B businesses to use, it’s clear that modernisation isn’t translating into reality.

Staggeringly, all senior decision makers surveyed admit that at least part of their organisation’s AR processes is still manual, with digital transformation amounting to little more than a buzzword for many.

The cost of manual systems

So what’s the price of this failure to innovate? The vast majority of organisations experience negative consequences due to their current AR processes. Common pain points range from an inability to forecast cash flow accurately to stifled growth because of cash flow related issues.

But there’s one difficulty faced by B2B organisations that stands out from the rest – late payments. Nearly half of respondents in our research pointed to overdue invoices as one of their top three business challenges.

And with a quarter of customers exceeding their payment terms on average, it’s estimated that nearly a third of an organisation’s monthly revenue is tied up in AR at any one time. This is a major threat to businesses in an uncertain and increasingly competitive B2B environment.

Embracing change

The case for change is clear. And there’s a strong desire to invest in AR processes at a senior level. So what’s stopping B2B firms from embracing automation?

Two words: education, and skills.

Leading decision makers at B2B businesses report these as the two biggest barriers to adoption of new payment technologies. In short, organisations are either unaware of the automation tools available to them or worried about a perceived lack of in-house technical expertise to implement new systems.

But with COVID-19 amplifying the need to shift away from the current status quo, organisations that fail to overcome these challenges risk revenue loss and business decline.

To start addressing these hurdles and find the right solutions for their businesses, B2B firms need to be honest about what isn’t working. Only by opening themselves up to change, and investing in new technologies, can they finally overhaul their AR infrastructure to unlock future growth.

The pandemic has been a wake up call for many. The previously untold damage of outdated and manual AR processes on cash flow is now plain for all to see. To stay ahead of the curve, businesses must embrace automation and digitisation if they’re serious about progressing payments in a post-COVID world.