Using an online payment portal helps B2B companies reduce late payments by 33% compared with companies that use accounts receivable (A/R) automation alone when it comes to chasing customers for outstanding payments, according to research by Gaviti, an accounts receivable collections platform.
In a press release, Gaviti said researchers reviewed over 14 million invoices sent through automation or preset workflows between 2019 and 2023, highlighting the contrast between those who used a gateway and their peers who saw an increase in delinquent payments.
While there has been a rise in the adoption of accounting and receivables automation over the last number of years, the majority of companies still rely on traditional manual practices, the company said.
Gaviti’s research showed that by adopting A/R collections automation, companies see days sales outstanding (DSO) improvement of up to 34% in the first six months alone. The study also shows that companies that implement payment gateways into their collections strategy experienced an additional cash flow improvement of 35% for a total of over 50% improvement.
“The 33% faster time to receivables is only the upfront benefit,” said Yan Lazarev, co-founder & CEO of Gaviti. “Teams who utilise multiple tools across our platform are seeing collections teams recoup an average of 227 hours per month along with better employee retention rates.”
The study focuses solely on the benefits of payment gateways and does not account for any boost in cash flow when moving from manual processes to full automation.
“In addition to a more reliable cash flow, the study showed a drop of late payments by 9% year over year and average days late (ADD) decrease by 34%,” said Michelle Cohen, lead data analyst at Gaviti.
“In addition, we were pleasantly surprised to find a 3% increase in early payments year-on-year,” Cohen added.