Mastercard and Basware – Exploring Payments and Discounting (A Tragic Irony)

Earlier this month, the Mastercard and Basware teams shared with Spend Matters and Trade Financing Matters a very comprehensive survey-based research study the two firms (and partners) had completed over the summer months. The study, based on responses from more than 1,000 finance professionals (on both the accounts receivables and accounts payables side of the fence), provides a very global view of where cash management and payments stand today (respondents from 10 countries are represented in the data set, and each country had approximately 100 responses). The survey participants were best represented by the SMB market segment (e.g., only 11 percent of respondents had 5,000 or more employees).

The full study, Creating Payment Energy – Unlocking the Value of B2B Payment Networks, is available from Mastercard and Basware directly. In a series of posts exploring the data and findings, the Spend Matters team will highlight some of the more useful elements that the research surfaced as well as select analysis and recommendations by the authors. We’ll share some of our insights as well.

In our reporting, we’ll talk about key observations and data from the executive summary (and showcase one of the great ironies of the research findings). On a high level, the authors observe that “obstacles causing payment inertia range from apathy and a financial mindset
that seeks to protect cash reserves, through to process bottlenecks and a lack of automation,” and that “businesses [are] resigned to payment conflicts.”

This is where the ironies begin. For example, “while 88 percent of respondents feel that suppliers should be paid promptly,” only “57 percent have actively delayed payments in the past 12 months.” And while “67 percent of respondents have used payment terms as a strategic lever to help manage cash flow … 74 percent of businesses think late payment is a fact of business life and will always happen.” Yet pretty much all agree on one thing: “90 percent of respondents see payment delays having wider repercussions for the business environment.”

Moreover, nearly 50 percent of respondents had “more cash in the bank compared with a year ago” and only 11 percent had a weaker cash position. At the same time, “69 percent of respondents have a clearly stated goal to generate value (cash) from the existing cash in the bank by investment or other means.” Yet as the rest of the data shows (and as we’ll explore) only a minority is doing very much about it yet, which will surface many more payment and cash management ironies as our exploration continues.

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