Four Payment Trends for Construction Financial Executives to Consider in 2023

The following content is sponsored by Commerce Bank.

Check use by U.S. businesses has reached a tipping point. Unsurprisingly, more than half of all businesses now make more than half of their supplier payments using methods that don’t involve paper.

What alternatives are other companies, including those in the construction industry, choosing instead? What pandemic-driven changes have they made in their accounts payable (A/P) and accounts receivable (A/R) functions that are here to stay? What other industries have implemented payment automation and how can those in construction learn from their successes? This article covers t four emerging trends that are helping to shape the payments and A/P and A/R landscape in 2023.

1. Use of Electronic Payments Is Growing

We continue to see companies move toward electronic payments year after year. Automated Clearing House (ACH) payments — electronic fund transfers made between financial institutions across the ACH network — and card payments are expected to net the most gains. Large companies — those with annual revenues of more than $500 million — are leading the way.

Many respondents say the emergence of COVID-19 and the remote work arrangements it spawned helped accelerate the digitization of corporate financial operations and they see no turning back, even as many companies are adopting hybrid workplace environments.

2. Industries That Automate Their A/P Function Are Reaping Multiple Benefits

Organizations that invest in A/P invoice automation can cut their cost per invoice by up to 80%, according to recent research. In addition to removing the labor associated with manual tasks, automated A/P processes also give companies more control over their financial data, which can contribute to everything from better decision-making to improved cash flow.

The retail trade industry is further along on the A/P adoption curve than virtually any other sector. Retailers today make as many as 70% of their payments using digital solutions. Wholesalers have also made considerable inroads into A/P automation, making about half of their payments with electronic methods.

But it’s not just the retail industry that stands to benefit from A/P automation; there are many industries that are on brink of better A/P efficiency and savings. Government, education, and health care providers have the most to gain, considering these industries still pay a majority of their invoices using paper-based methods. The manufacturing, insurance, finance, and utility industries also have great upside potential, given that automated payments currently account for roughly a quarter of their payments.

3. Card Acceptance in the B2B Community Is Accelerating

Not every commercial business is equipped to accept card payments, but that is changing. Thanks to virtual cards and other automation innovations, the variety and number of businesses now accepting electronic payments is growing. Early adopters like office supply and equipment companies have been joined by those in the food service, printing, shipping, travel, and computer industries.

Uptake by industries that have long-eschewed card use is also improving. For example, a growing percentage of professional service firms — including consulting, legal, and accounting firms — now accept cards. More than a quarter of temporary staffing services have gotten on the bandwagon as well as real estate companies. As these industries begin to reap the benefits of card acceptance, these numbers will continue to climb.

4. Unique Payment Needs Are More Easily Resolved

Insurance companies need ways to pay large claims quickly and securely. Health care involves complex reimbursement and payment processes, and providers have hundreds of different insurance companies and other payers who reimburse them for their services. Both are among the industries now benefiting from virtual card acceptance, single-use cards, and other innovations that streamline and digitize their A/P and A/R functions.

Many industries are working directly with banks to integrate these solutions. Commerce Bank, for example, has developed flexible automation and financial technology solutions that address specific incoming and outgoing payment challenges. In the case of health care, these solutions can improve payment efficiency. Other solutions are designed to protect against fraud, optimize early payment discounts, revenue share, and overall cash flow, or both.

The Bottom Line

The financial landscape continues to grow more complex, with billers seeking greater efficiency and security, and payers demanding more ways to pay. B2B companies that invest in payment system automation and that broaden the payment methods they accept are leading the way.

About the Author

Craig Higginbotham

Craig Higginbotham is the national sales manager for CommercePayments construction division.

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