The Hidden Value Lever PE Firms Keep Missing

Private Equity’s Most Overlooked Lever: Payments. Yes, Payments.

Let’s be honest: when PE firms talk value creation, payments are rarely the star of the show. Everyone’s chasing pricing power, cross-sell synergies, AI-fueled everything—but payments? That’s the plumbing. Not exciting. Not strategic. Just... there.

Except it’s not just there.

Across a typical mid-market PE portfolio, payment operations are an unsupervised mess. Different providers, varying fee structures, inconsistent reconciliation processes—and absolutely no one tracking the impact on working capital. Yet payments touch every transaction, in every company, every day. That’s not plumbing. That’s infrastructure. And if it’s inefficient, your returns are leaking.

What the smart firms are doing

The more sophisticated PE firms (you know who you are) are starting to treat payments as a portfolio-wide lever—standardizing vendors, streamlining ops, and leveraging scale to negotiate better rates and terms. Here’s why that matters:

• Cost savings, at scale. Fees for payment processing often range from 2–4% per transaction, but with consolidated volume and smart vendor selection, firms can push that lower. One portfolio? Maybe not a big deal. Ten? That’s a margin booster.

• Stronger cash flow. Faster settlement, cleaner reconciliation, fewer delays = more cash in the system. According to McKinsey, optimized payment processes can reduce working capital needs by up to 30%.

• Risk reduction. When every portco does its own thing, controls are weak. Payment fraud is real (and expensive). Standardizing tech and tightening governance reduces exposure.

• Better data. Consolidated payments infrastructure gives you visibility across the portfolio. Think trendlines, unit economics, benchmarking—all the stuff your ops teams pretend they already have.

So what’s stopping everyone?

Mostly? The perception that it’s not worth the headache.

Payments feel messy, technical, and buried in the back office. Portcos are busy—trying to grow, launch new products, hire teams, fix their CRM, maybe survive a replatforming—and nobody's dying to lift the hood on interchange rates or settlement timelines. A portco might find it easier clinging to the belief that they negotiated “great rates” for their business at a forgotten junction years ago—but haven’t looked under the hood since.

Even at the fund level, payments can fall into the “somebody else’s problem” bucket. After all, what’s a few basis points here and there?

Well… when you multiply that across every transaction, across every portco, those basis points start turning into real dollars. Millions, in many cases. And that’s before you factor in the opportunity cost of slower cash flow or missed optimization plays.

Here’s what else gets in the way:

• Lack of visibility. Most firms can’t even tell you what each portco is paying in processing fees, let alone whether those fees are fair. It’s a black box of vendor contracts, blended rates, and “this is just how we’ve always done it.”

• Fear of disruption. There’s a myth that changing payment processors or infrastructure will wreak havoc on a business. In reality, many upgrades can be done with minimal lift—and the long-term benefits far outweigh any temporary friction.

• Fragmented incentives. The portco CFO might not care about optimizing payments if it means more work for their team. But at the fund level? You absolutely should care—because it’s your return profile on the line.

• It doesn’t scream urgency. Payments problems are slow bleeds, not gushing wounds. But that’s exactly why they get ignored—and exactly why they’re dangerous. You don’t notice the drag… until you’re wondering why EBITDA isn’t quite where it should be.

The bottom line: complexity is real, but it's also solvable. You just need the right lens—and someone willing to go deep where most people hand-wave.

So what can you do about it?

• Start by getting curious. Ask questions no one’s asked in a while—or maybe ever:

• What is each portco actually paying in processing fees?

• Are there redundant vendors or legacy contracts that haven’t been reviewed in years?

• How long does it take for cash to settle—and how consistent is that across the portfolio?

• Are you getting any benefits from your collective volume… or is everyone negotiating in a vacuum?

Then, get a baseline. You don’t need to overhaul everything overnight, but you do need visibility. A simple audit of your current-state payments landscape can surface inefficiencies you didn’t know existed—and uncover quick wins that add up fast.

And if you’re not sure where to start? Give us a ring at CTP. We help PE firms map the payments sprawl, identify where money’s being left on the table, and recommend realistic, low-lift ways to tighten things up across the portfolio.

No jargon. No heavy lift. No magic wand—just better visibility, smarter decisions, and more money staying where it belongs: in your returns.