Payment errors and reconciliation delays are a consistent problem for 90% of CFOs

CFOs are desperate for more clarity, faster reconciliation and fewer errors in their payments and receivables. Automation solutions and artificial intelligence tools top finance chiefs’ list of strategic solutions.

The third annual State of Payment Operations 2023 report (conducted for Modern Treasury by the Harris Poll) finds that 90% of CFOs’ companies experience one or more problems when it comes to payments. The biggest problem – reconciling payments on the books with bank statements – takes “way too long” and leads to an incomplete picture of actual cash on hand.

Thirty-two percent of the decision makers from 500-plus companies polled said that payment reconciliation delays were their top pet peeve, followed closely by:

• a lack of real-time insight into cash balances (31%)
• a high rate of payment failures (27%)
• data errors (26%), and
• a low rate of accurate payment reconciliation (23%).

Seventy percent of decision makers say managing payments takes too long from start to finish, and 64% know their finance teams are wasting too much time on payment operations. CFOs don’t see their staffers as the problem – it’s outdated technology and siloed systems causing the delays and hiccups. Most CFOs want their employees focused on more important tasks, chiefly those that drive revenue.

Automation upgrades are well within reach

Unlike some problems that companies can’t solve yet, CFOs are equally confident they can alleviate their payment headaches soon. According to the Modern Treasury survey, 93% of CFOs said they’re likely to invest in payment operations in the next 12 to 18 months. Their top goals: shorter payment processing times (55%), the ability to manage all bank accounts in one platform/system (53%) and automatic reconciliation (51%).

Instant payment rails like FedNow are quickly gaining converts. Sixty percent of CFOs are using instant payment rails and 28% say they’re planning to use one within the next 12 months. As more and more payments begin to move instantly, companies will demand real-time, automatic reconciliation.

To prepare for the world of instant payments, CFOs will need to assess the compatibility of their current accounts payable, receivables and treasury management software, and whether their current vendors are capable of setting them up for success.