Cash management is always important, but it’s certainly gotten a lot more attention in the past 18 months. The COVID-19 Pandemic spurred me to realize that the enterprise cash management process has a lot of room for improvement.
Amidst all the uncertainty, companies have to keep a very close eye on cash. At the same time, remote work can make cash management harder. It’s hard to keep track of all the paper the payment process traditionally requires when everyone is working virtually.
When virtual work became imperative, there was a cash management scramble. Suddenly, all eyes were on the amount of time and manual effort cash management required. AP professionals were shuffling back and forth from the office to pick up paper invoices and check stock. AR professionals were trying to figure out how to get to the post office or lock box and get checks deposited to the bank. Invoices and checks could be sitting for many days before they could be processed. It was hard to know what was going to happen and when. The lack of consistency, visibility and control were in plain view.
This pain and urgency caused some people to take action. Cash and paper check payments declined 16% year-over-year in 2020, slipping to 45% of B2B payments. Automated Clearing House (ACH) payments rose above $10 trillion for the first time in history.
We saw a lot of companies fast-track payment automation in response to the COVID-19 Pandemic. Nvoicepay has been in business for 12 years, and a third of our customers signed up for payment automation since the start of the COVID-19 Pandemic. We also saw a 26% leap in vendors in our supplier network hopping off the check-only wagon and reaching out to enroll to get paid by virtual card or ACH.
45% is still a lot of check payments, though. Companies are still sending out thousands and thousands of checks every day. Too much time and effort, and too little visibility and control is still the story wherever check payments are being made. Organizations have simply learned to live with the pain.
Why does anyone tolerate such a painful status quo? Either they don’t know there’s a better way, or they’re so absorbed in managing day to day efforts that they can’t imagine a different future or feel it may be too costly to change from the way things have always been done.
When you stop to consider the full impact of payment automation on cash management, it becomes obvious how much better the future could be:
Though the COVID-19 pandemic put a spotlight on painful, inefficient cash management issues, the reality is that the enterprise cash management process has been struggling for a long time.
Efficiency, visibility and control are the most important facets of cash management. If you’re doing paper processing, you might be missing something important on one of those three fronts. When you take advantage of digital payment methods, automate processes and manage your staff's time better, cash flow management becomes significantly easier.