Middle Market Shows Second Consecutive Quarter Of Spending Growth In Latest Trends Report From AvidXchange
AvidXchange, the leading provider of accounts payable (AP) and payment automation solutions for the middle market, released the third report in its Middle Market Spending Trends series based on data captured from the 12 million payments processed annually through the AvidPay Network. To garner additional insights on sentiment around spending, AvidXchange also surveyed 500 middle market businesses on their reaction to the data.
The research shows that overall middle market spending grew by three percent in the first quarter of 2021, compared with the first quarter of 2020, marking the second consecutive quarter of positive growth since the on-set of the pandemic early last year. Despite optimism about these results, middle market businesses were surprised by the outcome. 43 percent of survey respondents expected spending to be higher and the same percentage expected it to drop, leaving only a small number who were aligned with actual spending levels. Despite showing broader economic recovery, this split among respondents shows how market conditions and sentiment about the health of the market continue to fluctuate and remain unpredictable.
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“Coming off such an unexpected year, it’s impressive to see this momentum behind middle market spending growth as companies move into a post-pandemic mindset,” said Dan Drees, Chief Growth Officer at AvidXchange. “This positive trajectory is a good indicator that money is flowing into and out of this major economic sector, allowing businesses to invest and remain productive as the market continues to shift.”
“Overall market conditions have been improving over the last few quarters,” said Jess Scheer, Executive Editor for the Institute of Finance and Management. “Business have been gaining confidence and are spending more to boost productivity and fine-tune operational efficiencies. They’re gearing up for a comeback and eager to see a return to a more prosperous new normal.”
Of the five industries examined in the report, the arts, entertainment & recreation industry has shown the largest growth rebound since last year’s second quarter when the pandemic began, although 58 percent of survey respondents expected higher spending in this industry by this point in the year. In contrast, construction spending suffered with a seven percent decrease this past quarter, the largest percentage decline in the last five fiscal quarters. In reaction to this decrease, nearly half (47 percent) of survey respondents believe the reason for the drop relates to new construction projects continuing to be delayed or halted as a result of the pandemic.
Spending growth rates in finance and insurance, along with technology, continue to lead the way compared with other industries. In every quarter since first quarter 2020, spending growth rose in these industries compared with the previous year.
AvidXchange’s Middle Market Spending Trends report is based on customer spending data across the AvidPay Network. As one of the largest payments networks for the middle market, the network allows businesses to make payments more efficiently and cost-effectively by transitioning suppliers to electronic options like virtual card and AvidPay Direct (APD). Offering services including maintaining supplier payment conditions and fielding calls on outstanding invoices, the AvidPay Network allows AP teams to focus on more strategic initiatives that support future growth, rather than printing and mailing paper checks.