Financial decision makers are losing a full workday – an average of eight hours in a typical working week – investigating payment operations problems. Many are caused by large parts of the payments process still being manual.

That’s according to a new report, The State of Payment Operations 2021, by financial automation specialist, Modern Treasury, which found that FinTech innovations have increased demand for more modern tools, software, and flexible APIs.

The company interviewed 300 US financial decision makers in companies of 500 to 5,000 employees and found 61 percent saying that manual payment operations take far too long and shift their focus away from urgent strategic priorities. 

While Modern Treasury could be said to have a vested interest in such findings, its research found that one-third of payment processes are still predominantly carried out by hand, creating an operational lag in work that demands access to multiple bank accounts and financial systems.

Nearly half (46 percent) of the US organisations surveyed have five or more different bank accounts, while respondents use an average of seven different systems to manage payment operations. Over one-third of finance leaders (36 percent) use 10-20 or more different enterprise systems. 

Often these are outdated and lack interoperability, causing further delays to both payments and investigations into any problems or failures. 

This may be why 84 percent of finance leaders grapple with unnecessary problems, such as slow payments, payment failures, and errors in data quality. 

Twenty-three percent of respondents report data quality errors, 22 percent high rates of payment returns or refunds, and 21 percent a significant lack of control over payments. 

Irreconcilable transactions make closing the books difficult, adds the report. 

When payment operations aren’t efficient or rely heavily on manual processes, businesses can’t manage their accounts as effectively or gain insights into their cashflow, warns the report. 

This becomes a cumulative issue for cash management – and also for the investigation of potential financial crime.

Nearly half (48 percent) of financial executives say it is hard to get a complete financial view of their company using their current systems, while the same number say that finance teams struggle to reconcile sent or received payments at least half of the time. 

More than half of decision-makers (51 percent) say finance teams waste a lot of time on payment processes, while nearly two-thirds (61 percent) say payments take too long from start to finish.

A large majority, 81 percent, say that modernising payment operations would benefit their businesses, recognising that errors in manual processes can have negative impacts on the bottom line and productivity. 

“Manual processes are the foundation for operational debt because delays across the payment lifecycle compound quickly,” says the report. “For example, a manually deposited cheque that is delayed half a day before undergoing batch processing affects when the transaction is settled, which affects when it can be reconciled, and so on. 

“If the reconciliation process is also done by hand, time spent matching their bank statement with transactions in their ledger means taking the focus away from higher priority strategies.”