How Failed Payments, Slow Payments, and Errors Bedevil Organizations

Consumers have come to expect an electronic payment to happen in seconds with zero or few errors, but for organizations the situation is a little more fraught. At least that’s the feedback from a new report, “The State of Payment Operations 2023,” from Modern Treasury Corp., a payments and financial services provider.

Released Thursday, the report found that fully 90% of companies faced problems with their payment operations. Chief worries were payment reconciliation taking too long, cited by 32%, followed by a lack of real-time insight into cash balances, 31%; a high rate of payment failures, 27%; data-quality errors, 26%; and a high rate of payment returns or refunds, 23%.

Problematically, 69% of respondents to the survey—conducted by The Harris Poll among 529 U.S. adults who work in finance, accounting, or product development and make financial decisions—also said that managing payments takes too much time.

“Financial decision makers are losing nine hours of work time per week dealing with payment operations issues, a trend that has remained flat over the last two years,” the report from San Francisco-based Modern Treasury says.

Their response is to invest more in payments operations. Most—55%—want shorter payment-processing times, the ability to manage all bank accounts in one system, 53%; and automatic reconciliation, 51%.

“Companies clearly see the gains to upgrading and automating payment operations, and it’s just a matter of when and how they do it,” Dimitri Dadiomov, Modern Treasury chief executive and co-founder, says in a statement. “That will not only benefit individual companies and their operations, but speed up the entire economy as money movement becomes more efficient.”

One technology gaining use is faster payments, with 60% already using some form of instant payments and 28% planning to use one in the next 12 months.

Specifically, 60% say same-day ACH transactions take more than one day to post and 47% say other ACH payments take more than two to three days while 54% says real-time payments take more than one hour to post.