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4 ways manual payments hurt your business

Emily Downer
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Last editedJul 20243 min read

Manual processes behind the scenes could be costing you time, money and customers. Find out some of the hidden costs of manual payment processes.

Manual payments might make you think of sending a cheque in the post or making a payment over the phone. What many businesses don’t realise is that, even though you might be collecting payments online, many of your processes can still be inherently manual behind the scenes, causing issues of their own. 

If left unaddressed, manual processes could cost your organisation time and money and create a negative experience for your customers. In this article, we’re going to look at some key payment metrics that are often overlooked when creating a full picture of the collection process. 

What are ‘manual payments’?

The manual payment meaning applies to any payment that requires manual input from the vendor. Whether it’s emailing customers to send payments, accepting cheques, or reconciling invoices, these are examples of manual payments.

By contrast, automated payments don’t require any input from the vendor. Instead, the automated system handles the transactions for you with very minimal input. 

Admin costs 

When it comes to assessing cost, most businesses look at the direct costs of collecting payments such as transaction fees or foreign exchange fees. Whilst these costs are integral to payments, by only considering the direct costs, you could be subjecting your business to unnecessary expenses. 

One of these indirect costs is the time and financial investment it can take to manage payments manually in-house. A study from Forrester shows that most businesses have 20+ full-time employees to manage recurring payments. Meanwhile, the PwC Finance Effectiveness Benchmarking Study found that 26% of the time spent on customer billing by finance teams could be automated.

People are a large part of your fixed operating costs. By automating and outsourcing payments, there lies a game-changing opportunity to significantly reduce outgoings. 

Cash flow 

This might be a metric that you’re already paying close attention to but perhaps not addressing in the right way. Cash flow is crucial for organisations as it enables them to invest revenue back into the business, however Forrester found that 80% of businesses are waiting up to 20 days past the due date to receive payments. 

With manual payment processes, you could be wasting time chasing customers for failed payments and manually reconciling invoices at the end of the month, all impacting the length of time it takes you to actually receive the cash you’re owed. 

By automating your payments, you can cut out all the lengthy leg work for your teams and get money in your account faster. Businesses working with GoCardless, for example, manage to reduce their overall payment timings by 47% according to IDC research. 

Customer experience 

Customer experience is paramount and your payment journey plays a huge part in this. 

It’s easy to think that the quality of goods and services you provide is the main influencing factor when buying from you - but that isn’t the case. We recently partnered with YouGov to understand the influence payments have on the buying journey and found that 67% of payers will stop a purchase if their preferred payment method isn’t available. 

It’s clear that payments are a divisive factor at checkout, so what are payers looking for? Using the survey results, we discovered that the top three reasons a payer chooses a payment method for both invoice and e-commerce purchases are:

  • Security

  • Ease of use

  • Money leaving the account right away

Clearly, removing complexity and uncertainty out of the payment experience is important to customers. Without the right processes in place, you could be losing people who would otherwise be happy, paying customers. 

Payment failures 

When a payment fails, it can have a huge knock-on effect on your business and on the customer experience. Forrester found that 11-15% of the value of a payment could be spent trying to recover it and up to 15% of failed payments can lead to customer churn. With revenue and customers at stake, payment failure is something that needs correctly addressing. 

When it comes to payment methods, not all methods are created equal. Cards for example, fail up to 8% of the time because they are lost, stolen or expire. Bank payments on the other hand, such as Direct Debit, because they’re more direct and pulled from one bank account to another, fail only 2.7% of the time. 

It’s also about how you manage any payments that do fail. Manually chasing customers to recover payments interrupts the customer experience and only results in 38% of payments being recovered. However there are better ways to do this. 

Success+ from GoCardless uses machine learning to intelligently identify when each customer is most likely to have funds in their account, and automatically retries on those days. It means the entire process is automated, you don’t need to chase the customer and up to 70% of payments are successfully retried. This significantly reduces the potential for payments to go left uncollected. 

The uncovered manual payment problem

Manual payment processes can often be hidden behind a digital facade. When understanding the impact of payments on your businesses, you need to assess the complete picture from payment failure, customer experience, churn and lengthy admin. 

By outsourcing and automating your processes, a lot of these issues go away meaning you can focus on what’s really important to grow your business.

Over 85,000 businesses use GoCardless to get paid on time. Learn more about how you can improve payment processing at your business today.

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Interested in automating the way you get paid? GoCardless can help
Interested in automating the way you get paid? GoCardless can help

Interested in automating the way you get paid? GoCardless can help

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