Covering 1,600 corporate finance leaders across the United Kingdom and the United States, the 2023 Business Payments Barometer is open for business. It is arguably one of the most comprehensive data-rich snapshots of this audience’s usage, needs and payment preferences, stretching across all business sizes, from small to enterprise.
To pick key findings out of this report is a tough task as it spans the big issues of the day: impact and usage of technology, new payment initiatives, cash flow management, fraud, and preparedness for future developments. We’ve picked five here to give you a taste of the report with an encouragement to read the entire draft yourself at www.bottomline.com/uk/payments-barometer.
Positive and negative effects of payment technology solutions
Technology has positively and negatively impacted companies and their customers since the industrial revolution. This year's 2023 Business Payments Barometer results form a similar dichotomy. On the positive side of the ledger, both the US and the UK sounded the loudest positive factor from payments technology as increased productivity: 60% of all US respondents and 58% of British companies singled it out. In fact, the two countries agreed right down the line on the other positive factors, from gaining a competitive edge to reduced cost and increased reputation. The US and Great Britain also locked in the same order of importance for those technologies for AI, mobile technologies and easier access to the cloud. Increased productivity and gaining a competitive edge come in as the top benefits on both sides of the pond.
Now for the negative side of technology adoption. Across the board, difficulty keeping up with technology and advancements hindered all four categories in both countries, as did increased costs. Interestingly, in the “access to the cloud” category in the US 41% of respondents reported increased cost as a negative, while only 36% in the GB identified the same. And both countries found competitive concerns a factor year-over-year. In 2022 only 39% in the US and 21% of GB companies were concerned about competition, with cost factors associated with the cloud coming in a close second.
Payment Method Acceptance
If you were looking for cash or cheques to take a big hit this year, you're disappointed. When asked what types of payment methods they started or stopped accepting in 2023, both cash and cheques fought to a draw. Cash and checks are most likely used occasionally in the payment mix. Both have been declining as viable payment methods over the past few years.
On the other hand, real-time or instant payments won a victory in this year's barometer. In the GB, 48% of respondents utilized real-time payments in 2022. That jumped to 55% in 2023, with large enterprises leading the way. In the US, 60% of all respondents claimed to use real-time payments in 2022, up this year to 66% with a big push from large and enterprise-sized companies. This stat does come with a caveat in the US: it's possible that same-day ACH, wire and card payments could be confused with true real-time payment rails, which has been a relative newcomer on the payments block.
Payment and cash management trends
All the positive or negative nuances, all the types of payments accepted, and all the other issues don’t account for much if businesses can’t pay and get paid. On that front, we asked a new question this year, “have you noticed a change in payment trends over the past year?” For both countries, late payers took most of that change, with 55% in GB and 58% in the US noting an increase. Failed payers were also a concern with 47% reporting an increase in GB and 41% in the US. Recurring payments took a 57% share for British companies, where direct debits are a popular payment method. However, US respondents also reported recurring payments happening more in 2023 than in 2022.
And how are those payments being tracked? Unfortunately, manual Excel files are still in use by 32% of UK respondents and 38% in the US. It's encouraging, however, that cash flow management software is up significantly in both countries (46% in 2022 to 59% in 2023 in GB) and 53 to 64% in the US. Artificial intelligence also grew significantly; 21% in 2022 to 34% in GB compared to 29 to 38% in the US.
In the business payments industry, fraud never stops, nor should the fight against it. Both countries saw increases in all three types of fraud compared to 2022. In GB, the plague of authorised push payment (APP) fraud continues, with 60% of respondents seeing more of it second to external cyber-attacks at 72% and just above insider fraud and collusion at 59%. Turn to the US, and the script evens out. Seventy-three per cent saw significant differences in insider fraud, followed by APP and external attacks at 72% each.
On a more positive note, total fraud losses were flat in GB. The sector that needed the most help there, small businesses, saw a 49% decrease. Both medium (23%) and large companies (19%) also saw increased fraud losses. In the US, the good news was harder to find. Total losses were up 21%, with medium-sized businesses seeing a 37% drop. All other sectors posted higher losses, including a concerning 43% spike for large enterprises.
In some ways, comparing GB to the US in the context of future payment initiatives is unfair. As a market-driven economy, the US has fewer big initiatives to prepare for in payments and banking; GB tends to be more regulatory in nature and ambitious in scope. So, when we talk about Great Britain this covers open banking, new overlay services like Confirmation of Payee and the New Payments Architecture (NPA) infrastructure overhaul. Preparedness for each of these has dropped since the barometer started tracking them in 2019. A lack of urgency was the most common reason for that lack of readiness.
In the US, the vocabulary changes, but the results are similar. Open banking is common to both, as is the adoption of ISO 20022. With the FedNow platform launching in July, the US should have a higher level of preparedness, especially for the 63% of the enterprise-level respondents who said they were ready for the messaging format, one that is closely associated with real-time payments.
The Bottomline: We have only scratched the surface of the 2023 Business Payments Barometer report here. It merits much more coverage to unpack all its findings, which you can unearth through webinars, podcasts, LinkedIn posts and thought leadership articles for the months to follow, including more data and interpretation from Bottomline subject matter experts.