Payments Insights: Driving Payment Efficiency

Regulation and Compliance


Marcus Hughes

Nov 4, 2019


For the last couple of years, we have been investigating the issue of late payments. In 2017, a slow payer ethic emerged as the biggest obstruction to getting paid on time and driving payment efficiency. In 2018, we delved into why businesses are adopting this strategy, with financial decision makers telling us it was in response to poor quality service, or to protect their own liquidity. Invoicing mistakes from vendors were also to blame.

Insider fraud is also on the radar, with three out of five (61%) financial decision makers concerned about this. Yet some financial decision makers only rely on staff vetting processes at the initial recruitment stage to mitigate insider fraud. This could be a false comfort as one-off vetting is unlikely to be sufficient and companies require on-going security checks to protect the business from costly error and reputational risk.

This year, late payments remain a challenge with nine out of ten (92%) financial decision makers admitting to paying suppliers late. With so many paying late, it’s clear that Government intervention, like the Duty to Report (DTR) regulation introduced in 2017, requiring businesses to report on payment practices, is doing little to curb this behaviour.

The causes of late payments continue to be a mix of internal and external factors. Financial decision makers remain ready to lay the blame outside the door of their suppliers, citing poor quality service or incorrect invoice details as reasons for late payment (the same was seen in 2018). However, they also hold themselves to account. Two in five (40%) financial decision makers admit their business has inefficient Accounts Payable processes which limits their ability to pay on time – an issue most prominent amongst medium sized organisations (51%).

Protecting cash flow in one form or another is also a factor. Just over a third of financial decision makers (35%) are actively guarding liquidity, with decision makers in large organisations most prone to this behaviour (48%).

So how do companies solve this problem?

On the Accounts Receivable side, cloud-based solutions for distributing and tracking invoices electronically introduces the need to manage data in real-time, and improves the likelihood of getting paid without undue delay.

Similarly, Accounts Payable automation solutions make it easier to process and approve invoices quickly and flexibly. Efficient and timely invoice approval then opens-up opportunities for businesses to partner with finance providers to put in place early payment programs.

Such collaborative arrangements in a digital world mean that payers can meet their own objective of not paying away hard-earned cash early and minimizing the usage of overdraft facilities, while at the same time, helping their suppliers to improve their inbound cash flow and get paid more quickly. Could it become a competitive advantage to be a good payer in a trading relationship? It certainly implies so, as good payers will be in a better position to negotiate contracts with trading partners and create relationships that allow for more accurate cash forecasting on both sides.

"If we pay late it's because something got stuck in the process."

Financial Controller, Small business


According to the UK Finance Business Payments Survey, Faster Payments for business have grown substantially, rising from 3% of payments in 2012 to 20% in 2018. This is reflected by the financial decision makers we spoke to, with nine out of ten (90%) saying they will be using real-time payments (also known as Faster Payments) by 2020. This is from a base of just over half (53%) of financial decision makers already using real-time payments.

With adoption of real-time payments for business set to increase, this provides further evidence of what we have called the increasing consumerisation of business payments. With instant transactions becoming the norm for consumers, this is pushing an expectation for business transactions to be conducted in the same way. In fact, according to the UK Finance Business Payments Survey, companies are shifting away from cash and cheques to pay salaries and wages, and are now using Faster Payments.

The projected rise in real-time payments could also be down to more generous payment limits in the UK. Other markets offering real-time payments, such as Singapore, Australia, US and the EU, have much lower transaction limits (up to €15,000 in the EU). The current transaction limit in the UK is £250,000, and likely to increase, making real-time payments viable for a wider range of businesses in the UK.

Taking this further, the Netherlands launched their National Instant Payments Service this May, a real-time payments system with no transaction limit and low fees, underlining the need for a progressive approach when it comes to the adoption of real-time payment for businesses.

With the anticipated rise in real-time payments, it’s imperative that organisations also consider their defences against fraud. The faster money moves the quicker the potential for payment fraud. Corporates must ensure they re-align their security measures around Faster Payments. Technology that analyses 100% of transactions is critical when it comes to identifying anomalous payments on the fly. Relying on people and processes alone could be costly as cyber fraudsters are ready and waiting for this obvious trap.

When payment security is handled effectively, the benefits of real-time in the payments landscape have the potential to be dramatic and far-ranging. The power of instantaneous payment processing offers an opportunity to reimagine business models. What if businesses could manage cashflow in real-time, make disbursements immediately or pay staff on a daily basis rather than a monthly batch? It’s clear that real-time payments are here to stay.


It comes as no surprise that financial decision makers position mitigating fraud risk (21%) and compliance (15%) as the top priorities for their business. This demonstrates that the survey respondents recognise the risks and threats they are under and are ready to implement change. It also reflects a narrowing of the ‘knowledge chasm’ over the last two years as the industry has taken steps to ensure that fraud and compliance are high on the agenda.

The increasing impact of payment fraud, customer personal data theft, and the fines imposed on banks and companies for breaches of regulations all underline the risk of financial loss and damage to an organisation’s reputation if they do not up their game in ensuring they have a robust strategy and technology in place to protect themselves. There remains a difference however, between what people say and what they do. Are businesses doing enough to protect themselves from the risks in a world of digital norms and Open Banking?

For more thoughts about the future of UK business payments, including further insight into priorities over the next 12 months, view the full “2019 UK Business Payments Barometer” or listen to the podcast episode here.

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Marcus Hughes

Marcus Hughes, Director of Business Development for Bottomline Technologies, is a senior transaction banker with a successful history of product innovation, thought leadership and business development in a major European bank, a UK clearing bank and prominent technology firms.
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