Most businesses still rely on manual processes to handle at least part of their payments, contributing to a growing problem with failed payments.
According to Modern Treasury’s new report, The State of Payments Operations 2025, the vast majority of financial decision-makers say their company struggles with its current payment operation. This has been a consistent issue, with 88% and 90% reporting challenges since 2022.
Remarkably, manual processes are still widespread. More than half of surveyed companies say that between 26% and 50% of their payment operations are still performed manually. Nearly all businesses report having at least some manual payment processes in place.
These processes are leading to a high rate of errors. A quarter of the financial decision-makers reported regularly dealing with data quality errors, high rates of payment returns or refunds, and frequent payment failures. Nearly two in five companies experiencing issues with their current payment operations stated that more than 10% of their payments fail, are returned, or are reversed.
This issue appears to be growing. Fewer than a third of respondents reported these same problems in the 2023 survey. Respondents commonly described their payment processes as complicated, slow, and inefficient.
The Promise of Automation
Automation is the antidote to many of these problems, greatly reducing human errors in payment operations and enhancing accuracy across the organization. Global AR/AP Automation: Improving Cash Visibility and Reducing Risk, a report from Javelin Strategy & Research, revealed that when manual systems are eliminated, processes such as invoice receipt, processing, payment, audit trails, and downstream analytics achieve new levels of efficiency. Fewer hands involved lead to greater streamlining and efficiency.
The inefficiency of these outdated systems crops up in other areas as well. Modern Treasury found that payment operations issues cost businesses an average of one workday per week. Three in 10 businesses reported losing more than eight hours dealing with payment operations issues, while another 9% lose more than two days.
Nearly three-quarters of respondents said that managing payments takes too long from start to finish, an increase from the previous year. A similar number stated that their finance teams waste too much time on payment operations.
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