How CFOs Can Put Some Numbers Against Payments Modernization

For many chief financial officers and finance teams, however, payments modernization has become one of those phrases that sounds expensive and complicated before it ever sounds profitable.

That perception, of new rails, new vendors and new risks, has kept digital transformation initiatives across B2B stuck in the nice-to-have no-man’s land, while paper checks and legacy accounts receivable (AR) and accounts payable (AP) methods keep grinding out their 30- 60- 90-day good enough B2B payments.

But the reality is that these legacy payments cost money too, and some CFOs are starting to pay attention. What has changed in the past handful of years is that payments can now shape the timing and certainty of cash flows in ways that materially affect balance sheets.

A payment method that shifts risk, compresses settlement cycles or changes who funds the working capital gap can alter liquidity profiles even if headline metrics barely move. In an environment of heightened uncertainty and cost of capital, those impacts can carry real economic weight.

Payments modernization, in this context, is not about keeping up with innovation cycles, and viewing it through that lens can miss the point. Embracing solutions like virtual cards, automation and artificial intelligence across payment workflows is becoming about applying a more exacting analytical standard to how money moves through the enterprise.

CFOs who can demonstrate that digital transformation across AR and AP shortens the distance between revenue and usable cash, rather than merely improving reported averages, can position their bottom lines to accrue compounding advantages.

Read also: Why CFOs Who Prioritize Cash Flow Improvements Start With Receivables Innovation

A More Exacting Standard for B2B Payments Modernization

Faster payment rails, automation and embedded credit products have existed in various forms for years, and what has changed about today’s operating environment is the cost of payment delays. Each additional day between invoicing and in-bank settlement carries a measurable opportunity cost. The CFO’s task is no longer to modernize payments in principle, but to determine whether modernization produces a quantifiable reduction in the time value of trapped cash.

According to the PYMNTS Intelligence report “Time to Cash: A New Measure of Business Resilience,” payments modernization can be viewed as a balance sheet issue rather than a process upgrade. Shortening Time to Cash is not about optics, but about reducing the amount of capital the business must carry to function.

This requires moving beyond familiar but increasingly inadequate metrics. Days sales outstanding (DSO) still appears in earnings calls and dashboards, but it captures only an average outcome, not the operational reality beneath it. The more revealing question is whether the long tail of receivables is shrinking, and whether cash is arriving not just marginally sooner on paper, but meaningfully faster and with greater predictability in practice.

A company can improve DSO through accounting timing, selective enforcement of terms or portfolio effects without altering the underlying cash cycle. Conversely, it can leave DSO largely unchanged while materially reducing the incidence of late and disputed invoices. From a liquidity perspective, the second outcome is often more valuable, even if it does not show up cleanly in a headline metric.

This tension is central to why finance leaders struggle to justify investment in payments modernization. The benefits are real, but they do not always present themselves in the numbers executives are accustomed to defending. The result can be a mismatch between operational improvement and reported financial impact.

See also: The Classic ERP Model Is Dying. What Comes Next?

Virtual Cards, Automation and the Long Tail of Receivables

Few payment instruments illustrate the shifting dynamic around money movement as clearly as virtual cards. From a superficial perspective, virtual cards appear to benefit buyers by extending payment terms through a bank-funded grace period, often around 30 days. Suppliers, meanwhile, face interchange fees that do not apply to ACH or wire transfers.

This framing misses the balance sheet reallocation at work. When a buyer pays by virtual card, the supplier typically receives money within one or two days. The supplier’s receivable is extinguished almost immediately, and the financing gap shifts from the supplier’s balance sheet to the card issuer’s.

For the supplier, the relevant comparison is not the fee versus “free” payment methods, but the fee versus the cost of carrying receivables. Faster, more certain cash can reduce reliance on external financing and improve liquidity resilience, even if headline DSO moves only modestly.

The largest gains from payments modernization often occur where averages obscure risk: the long tail of receivables. A relatively small share of invoices typically accounts for a disproportionate amount of overdue balances. These outliers consume collections resources, increase forecasting error and create liquidity surprises.

Automation directly targets this problem. The PYMNTS Time to Cash framework identifies receivables as the first mile of Time to Cash, where friction is most visible and where improvements translate most directly into liquidity.

These effects rarely show up in a single KPI. They appear instead in the shape of cash flow distributions, the frequency of short-term liquidity shortfalls, and the accuracy of forecasts.

For CFOs attempting to put numbers against payments modernization, the lesson is not to abandon established metrics, but to contextualize them. DSO can remain a useful summary statistic, but it should be complemented by measures that capture timing, variance and usability of cash.

Time to Cash provides one such framework by decomposing liquidity velocity into 12 operational levers across receivables, payables, workflows and financial visibility. Ultimately, these are balance sheet questions, not technology ones.

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