The high cost of paper invoice processing (rightfully) gets a lot of the focus in accounts payable. However, more businesses are taking a hard look at the high cost of paying suppliers with paper checks.
Businesses are recognizing that compared to electronic payment alternatives such as Automated Clearing House (ACH) transactions and cards, checks cost too much, take too long, create too many opportunities for fraud, and provide buyers and suppliers with inadequate visibility.
In fact, paper checks cost up to 30 times as much as ACH payments, the National Automated Clearing House Association (NACHA) reports.
Accounts payable solutions such as NexusPayables support electronic payments.
Electronic payment solutions facilitate payment in the format accepted by suppliers (in some cases, vendors even offer check mailing services). Once invoices have been approved for payment to suppliers, the electronic payments solution automatically notifies the buyer’s financial institution, and sends payments in the supplier’s desired format.
With electronic payments:
- Liabilities are immediately recorded
- Reconciliation is streamlined
- Activity is governed by business rules and permissions
- Buyers gain better visibility into cash
- All activities are automatically tracked
These are some of the reasons that electronic payments are winning the battle against paper checks. Fifty-three percent of payments are now made electronically, Ardent Partners reports. A stout 82.1 percent of organizations surveyed by IOFM generate or receive electronic payments via ACH. What’s more, 59 percent of organizations make purchases via cards, and 39.7 percent use EDI.
Importantly, nearly 40 percent of senior finance executives surveyed by IOFM said their business planned to deploy electronic payments in 2015.