In an increasingly digital world, electronic treasury processes can offer businesses an important path forward, not only in terms of realizing efficiencies, but also managing their working capital effectively. But many businesses continue to rely on paper-based processes for their payables and receivables. In 2024, 92% of organizations were still relying on checks – showing a clear lag in the adoption of electronic solutions when compared with business-to-consumer payments.1

While companies may have valid reasons for continuing to rely on paper checks and invoices, the disadvantages of doing so are clear. In addition to the risk for fraud, perhaps the most significant factor is the inherent delay that comes with sending and receiving paper documents through the mail.

“Relying on paper-based payments or invoices means relying on the post office – and this means delays,” said Scott Bellomo, operations executive in PNC Treasury Management. “Mail float has greatly deteriorated over the last couple of years, to the extent that it can take weeks for a paper invoice or check payment to arrive at its intended destination. To manage working capital effectively, a company’s goal is always to reduce its days sales outstanding (DSO) and collect customer balances as quickly as possible. Relying on the postal service and paper processes only serves to add to the timeline.”

On top of delays, other external factors can contribute additional complications, including the availability of employees to handle manual paper processing tasks. Business continuity disruptions, such as those that occurred during the COVID-19 pandemic and during recent natural disasters in areas across the country, can leave businesses unable to manage printing and sending invoices or process payments remitted to office locations.   

“This is something we saw play out in the pandemic, when companies who were not able to report to the office had to scramble to find solutions,” Bellomo said. “The ones that fared the best then and that continue to perform most effectively now are those that are relatively paper-free and that allocated the necessary capital to transition their Enterprise Resource Planning (ERP) systems in order to adjust to operating in a digital-friendly environment. They have created closed-loop solutions, where they can submit invoices and remit payments electronically.”

Optimizing the cash conversion cycle depends largely on having interconnected solutions that automate and streamline processes. These may include tools and platform like PNC’s Advanced Receivables solutions, which can help streamline cash flow and improve efficiency in managing accounts receivable. Digital tools can also play an important role in extending the payment cycle on the payables side. Automated solutions, such as Intelligent Routing or Integrated Payables, can help businesses lower processing costs and control the timing of the release of funds.

For businesses with a long history of reliance on paper invoicing and check payments, the prospect of a digital upgrade may be daunting, but it isn’t something they have to tackle on their own, according to Bellomo. “These digital solutions may seem like a major shift, but the reality is that they are not difficult to implement and can provide a major lift in terms of business performance. In PNC Treasury Management, we’re focused on working closely with businesses to determine how best to integrate solutions that can help meet their particular needs.”

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PNC’s team of industry specialists is available to unlock business potential, navigate new technology, and overcome the challenges that come along with digital transformation. No matter the company's industry or size, PNC Treasury Management platform solutions are flexible in scope and geared towards driving measurable results and improving key performance indicators. For more information, reach out to your PNC Relationship Manager, or contact us.

Sources

1. Making the Switch: Moving from Checks to Digital Payments