U.S. businesses finally appear ready to shed paper checks and embrace digital payments for business-to-business (B2B) transactions, according to the AFP 2020 Survey, sponsored by Truist.

Conducted virtually at AFP 2020, the survey aimed to determine the likelihood of organizations to move away from checks to electronic payment methods and the benefits of doing so. Additionally, respondents were asked about payments fraud trends since the start of the COVID-19 pandemic. The survey received a total of 202 responses, of which 156 responses were from corporate practitioners. Responses received from corporate practitioners form the basis of this report.

ELECTRONIC PAYMENTS ADVANTAGES

Nearly 60% of practitioners reported that their organization is either very likely or somewhat likely to convert the majority of its B2B payments to suppliers from checks to electronic payments. One-third of organizations are currently primarily using electronic payments for their B2B transactions. Only 5% of organizations have no plans to convert from checks to electronic payments, while five percent are unsure.

As organizations increasingly use electronic payments for their B2B transactions, they are also realizing the benefits of doing so. Straight-through processing to A/P or A/R and general ledger is the top benefit of sending electronic payments, cited by 49% of respondents. Forty-five percent of practitioners reported their organizations benefited from cost savings when sending payments electronically. Improved cash forecasting and speed of settlement is considered a key benefit by 42% of respondents. 

As for receiving payments, half of survey respondents note that the speed of settlement is a key benefit. Other benefits of receiving payments from customers via electronic methods include:

• Straight-through processing to A/P or A/R, and general ledger (31%)
• Improved cash forecasting (30%)
• Improved matching for cash application (27%)
• Improved supplier/customer relations (26%).

 

But as organizations use electronic payments to a greater extent for their B2B transactions, they are likely going to face greater barriers when doing so. When examining both the major and minor barriers, at least 70% of respondents cited the following:

• Lack of customer or vendor adoption (79%)

• Cost of making changes to existing internal processes (74%)
• Absence of a standard format for remittance information (74%)
• Lack of integration between electronic payment and accounting systems (71%).

PAYMENTS FRAUD TRENDS  

Forty percent of organizations experienced a great number of fraud attempts since March 2020 compared to the same time-frame as last year. Another 40% reported that the number of fraud attempts at their companies was unchanged compared to last year. Only 3% were targets of fewer payment fraud attempts than the previous year and the remaining 17% were unsure about the change in the instances of fraud at their companies.

Forty-two percent of respondents reported that an outside individual (e.g., check forged, stolen card) is responsible for the attempted/actual payments fraud attempts at their organizations since March 2020, while 16% believe a third-party or outsourcer (e.g., vendor, professional services provider, business trading partner) targeted their companies. At 15% of organizations, attempted/actual payments fraud attempts are due to an account takeover (e.g., hacked system, malicious code). Crime rings were the cause of fraud attempts at 7% of organizations and one-third of practitioners were unsure what caused fraud at their companies.

CONCLUSION

The results suggest that organizations have converted or are likely to convert the majority of their B2B transactions from checks to electronic payments. Recent research suggests that in the current, remote working environment, many companies are making this transition due to the convenience that electronic payments offer. But while most respondents see these benefits, they also recognize substantial obstacles.

Meanwhile, fraud continues to be a top concern for financial professionals during the pandemic crisis. Fully 40% of respondents reported that fraud attempts have been on the uptick at their organizations since last year. However, another 40% said fraud attempts remained the same from the year before. The data suggests that fraud is, at the very least, a consistent threat that may be growing more potent in this new environment.

In conclusion, organizations appear ready to meet this unique moment by making necessary changes to their payment processes. However, they must remain vigilant, as threats also continue to adapt.

Read the full results of the AFP 2020 Survey, A Snapshot on Electronic Payments and Payment Fraud at Organizations.

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