Sep 7, 2017 Lauren Ruef
On the forefront of every accounts payable professional's mind is the supplier. Did the check get there on time? Is it correct? Will I get an angry phone call a week from now if it gets lost in the mail?
It's enough to lose sleep over, and we're not even talking about tax season.
You'd think the manual process of making check payments would come into question, but unfortunately, it's an expected stress of the job in AP. Checks need cutting. Supplier phone calls are a constant. Approvers need something to sign. As the saying goes: "Somebody's gotta do it."
But is that really true?
Created by Ryan Mason
Why businesses procrastinate on upgrading to electronic payment solutions
When payment approvals pile up and checks get lost in the mail, the paper glut is highly preventable. Automation solutions are ready to do the heavy lifting but here's why companies procrastinate on upgrading to electronic payment solutions:
- You don't have time to spare to integrate a new technology solution.
- You fear a new solution won't work with existing solutions you have onboard.
- Some of your suppliers can't accept checks due to regulatory requirements.
- You don't have IT resources to spare for the setup time.
- You are nervous about someone else handling your supplier data/payment info.
These are all understandable reasons. Time is money. And it's difficult for AP personnel to imagine slowing down enough to adopt and learn a new solution while still buried in unprocessed check payments. Change is difficult when you're too busy to invent a way around the problem or you're worried about marrying your AP process to a tech solution that won't deliver.
Your suppliers want virtual card payments
But the truth is, most suppliers want the option to accept virtual card payments because there's less friction involved. Checks are slow, costly, and more prone to fraud. And trends show that B2B card and ACH payments are dramatically on the rise.
A 2016 Federal Reserve Payments Study cites:
"U.S. non-cash payments, including debit card, credit card, ACH, and check payments, are estimated to have totaled over 144 billion with a value of almost $178 trillion in 2015, up almost 21 billion payments or about $17 trillion since 2012."
That's a lot of non-cash payments. And as the trend goes, both consumers and businesses are abandoning check payments. The same report confirms it:
"A previous Federal Reserve study showed that the use of checks by number had peaked in the mid-1990s. The five previous triennial Federal Reserve payments studies showed a persistent decline in check payments."
This means, for better or worse, checks are on their way out and the opportunity in AP to embrace electronic payments is unprecedented. In the spirit of collaboration, businesses should be thrilled with the prospect of working more efficiently with suppliers. Instead of waiting for them to ask, "can you pay us by card?" proactive outreach has proven highly effective, so why don't more businesses do it?
The problem is time. You want to conduct outreach to enable suppliers to accept card payments, but don't have the resources to dedicate to it. AP personnel is already buried in other processes and supplier data management isn't one of them.
Get an automated electronic payment solution
That's where a payment automation solution comes into play. Barriers to ACH or virtual card payment adoption are eliminated when a specialized payment support team handles your B2B payments. This cuts down on manual processing time, but also allows existing AP staff to focus on high priority tasks instead of cutting checks and shuffling them around the office for signatures.
The added benefit is also a reduction in check payments. Paying suppliers electronically not only saves companies money but allows the AP department to pivot toward more strategic roles. It eliminates the need to add more headcount, decreases clerical tasks like check printing and wet-ink signatures, and speeds up the process of paying suppliers for better cash flow.
As the consumer and B2B world moves to adopt non-cash payments at a rapid rate, those who cling to the old way of paying will be left with a reactionary way of solving the problem. Those who are working with a heavily manual payments process know this best. Don't wait for the problem to get worse before seeking a solution.