More than 80% of UK businesses say the future of their company is threatened by late payments, a result of outdated accounts receivable (AR) processes, according to a new report from global payment technology expert BlueSnap.

The new research reveals that current AR practices are impacting cash flow, human resources and talent acquisition, while also being a drain on senior executive time within B2B businesses.

The BlueSnap Progressing Payments Report found that 93% of B2B organisations in the UK experience negative consequences due to their current approaches to AR, with more than a third (37%) unable to forecast cash flow accurately.

On average, a quarter (25%) exceed their payment terms, resulting in 29% of a company’s monthly revenue being tied up in AR. This is such a major issue that 81% of senior decision makers believe that the future of their business is threatened by a lack of cash flow, brought on by overdue invoices.

A major culprit in all of this is the reliance on manual AR processes, with all (100%) of senior decision makers admitting that at least part of their organisation’s practices are not automated. These included faxing (31%) and posting (39%) invoices and accepting payments in cash (11%) and physical cheque (9%).

The use of manual processes not only increases the risk of human error but also demands more time and resource spent managing invoices. On average, senior decision makers estimate that a total of 11 working hours are spent managing a single invoice, with 78% estimating that up to 15 people are involved in this process.

“The COVID-19 pandemic has opened businesses’ eyes to the until now untold damage of outdated and manual AR processes on cash flow,” said Nikhita Hyett, Managing Director, Europe at BlueSnap. “With the benefits of automating legacy systems now beyond doubt, it’s high time B2B firms overhaul their AR infrastructure to unlock future growth.”

“While many of the businesses we surveyed consider themselves to be on their digital transformation journey, the B2B arena lags significantly behind the B2C market, where payments innovation is not only welcomed but expected, as consumers come to demand greater flexibility and more ways to pay.”

Respondents recognised the need for change – 93% thought they should be investing more in AR automation and payment technologies, with predicted benefits including improved cash flow (34%), better forecasting and planning (31%), and reducing late invoices (25%).

However, they also saw the opportunity for increased growth – 28% believe it would give their organisation the ability to invest and grow, while 24% linked AR automation to winning more business from existing customers. 

“Forward-thinking businesses that embrace automation and digitisation in their AR processes will reap the benefits in an increasingly competitive B2B market and a time when cash flow is more important than ever,” Hyett explained. “But this means identifying and overhauling manual touchpoints in the AR journey. It is only by automating these outdated systems and procedures that will enable firms to improve forecasting, reduce costs and reconcile payments more efficiently, as well as free up their teams to focus on higher level tasks that drive business growth.