New Study Reveals the Struggles that Many Businesses Face in Getting Paid During the COVID-19 Pandemic

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GoCardless study finds 96% of enterprise businesses are waiting more than 10 days on outstanding payments.

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GoCardless, a leading fintech for recurring payments, today unveiled a new Forrester Consulting study it commissioned which found that 96% of businesses have outstanding payments for 10+ days. The study, ‘Rethink Your Payment Strategy to Save Your Customers and Bottom Line’, examines how companies can use recurring payments2 solutions to boost their payments strategy, shorten DSO (Days Sales Outstanding), and protect their bottom line. A snapshot of U.S.-based findings from the report can be accessed here.

Forrester surveyed 700 payment decision-makers in organizations that serve a mix of businesses and consumers, or business customers only. U.S.-based businesses made up 297 of the study’s 700 respondents. The results highlight the extent to which lengthy DSOs and failed payments can impact customer churn and bad debt.

THE STUDY FOUND THAT HAVING A HIGH DSO IS A KEY OPERATIONAL CHALLENGE FOR MANY BUSINESSES. In the U.S., over half of the businesses surveyed reported that time to receive payments has increased over the last 12 months, with almost 80% stating it takes more than 20 days. While only 4% of global businesses have a DSO of less than 10 days, the research shows that four out of five businesses have wait times of 20-30 days to receive payments. In addition to this, almost half (47%) of businesses say that the time taken to collect their accounts receivables has increased in the last 12 months - this demonstrates the struggle for many businesses to get paid in the current challenging environment of COVID-19.

ANOTHER KEY FINDING IS THAT FAILED PAYMENTS CONTINUE TO IMPACT CUSTOMER CHURN. Forrester found that 50% of firms experienced payment failures for 7% or more of their payments in the last 12 months, and two in three businesses surveyed are seeing failed payments turn into churn more than 10% of the time. This can negatively impact customer relationships, with over half (54%) of decision-makers surveyed saying that payment failures lead to an increase in customer dissatisfaction.

PAYMENT FAILURES ARE ALSO COSTLY AND LABOR-INTENSIVE FOR BUSINESSES TO COLLECT, with the average B2B business spending 16%-20% of the payment value to recover it. Half (51%) of the businesses surveyed said that failed payments led to an increased cost of recovery, while 45% of businesses say that payment failures turn into bad debt.

“Forrester’s findings demonstrate exactly why payments are high leverage,” said Hiroki Takeuchi, CEO of GoCardless. “There are clear connections between failed payments and negative business impacts such as bad debt, churn and customer dissatisfaction. In this environment in particular, firms recognize the importance of recurring payment solutions that optimize their payment strategy and prevent failure, to avoid increased costs and damaging customer relationships. That’s why we developed Success+, which helps businesses efficiently recover an average of 76% of failed payments.”

ADDITIONAL KEY U.S. FINDINGS:

  • 20% or more of failed payments result in bad debt for over a third of U.S. B2B firms
  • 70% of the U.S. businesses surveyed said that 5% or more of their payments have failed in the last 12 months with 40% of them reporting that their profitability decreases when payments fail
  • Over 60% of the U.S. businesses surveyed plan to upgrade or implement a pull-based payment solution for selling products or services in the next 12 months
  • 70% of the U.S. B2B businesses surveyed are embracing bank debit over check payments, which currently stand at 64%. This demonstrates that digital payments are increasing and that there is a trend from manual to automated payments among businesses

1 Forrester study, ‘Rethink Your Payment Strategy To Save Your Customers And Bottom Line’ published November, 2020
Surveyed 700 decision makers serving B2B & B2C from organisations with $100m turnover.
2 Instalments, invoices and subscriptions

About GoCardless
GoCardless is a global leader in recurring payments. The GoCardless global payments network and technology platform takes the pain out of getting paid for more than 55,000 businesses worldwide, from multinational corporations to small businesses. Each year, GoCardless processes US$15bn of payments across more than 30 countries. GoCardless is headquartered in the UK, with additional offices in Australia, France, Germany, and the United States. For more information, please visit http://www.gocardless.com/en-us/ and follow us on Twitter @GoCardless.

© 2020 GoCardless Ltd. All Rights Reserved. GoCardless is a registered trademark of GoCardless Ltd in multiple countries. Third-party trademarks mentioned above are owned by their respective companies. Unless explicitly identified as such, nothing in this press release should be construed to the contrary, or as an approval, endorsement or sponsorship by any third parties of GoCardless Ltd. or any aspect of this press release.

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