On the forefront of every accounts payable professional's mind is the supplier. They wonder if the check was received on time, if the amount was correct, and whether a week from now, they will receive a curt phone call from the supplier, asking this one simple, but daunting question:
"Where is my payment?"
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?
Illustrated 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. Intelligent automation solutions are on standby to do the heavy lifting, but here's why companies procrastinate on upgrading to electronic payment solutions:
- Lack of time or IT resources to integrate a new technology solution.
- Fear or mistrust of the promises of a new solution and how it will work with existing tech.
- Supplier hesitation around accepting electronic payments due to regulatory requirements.
- Lack of visibility or right prioritization of the problem i.e. (upper level management understand the need.)
- Caution around a third-party 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 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.
But the truth is, most suppliers want the option to accept virtual card payments because there's less friction involved. They are secretly (or not so secretly) waiting for you to ask this one question that could change the game for how you make payments. Here it is:
"Would you like to get paid sooner and more efficiently with an electronic payment option?"
Your suppliers want virtual card payments
Checks are slow, costly, and 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. There's a way out of the paper check stack and it doesn't involve bulky machinery or adding headcount but a dynamic way of looking at the problem and it's solution.