Automation is providing accounts payable departments with significant strategic benefits. However, these accounts payable departments will never achieve the full benefits of automation without tackling the last step of the procure-to-pay cycle: payments.Electronic invoicing platforms such as NexusPayables offer solutions that make it easier than ever for organizations to migrate to electronic payments.
Compared to traditional approaches to paying suppliers, electronic payments offer six benefits:
- Cost savings. For many businesses, the high cost of processing paper checks is reason enough to transition to electronic payment methods. PayStream Advisors’ Electronic Payments and P-Cards Adoption Survey found that the need to reduce accounts payable transaction costs is the biggest factor driving electronic payments. By transitioning to electronic payments, some businesses have experienced cost savings of more than 60 percent.
- Faster turnaround. Businesses can process an electronic payment within seconds, whereas a standard check payment could take several hours or more. Accelerating payment cycle times reduces the chances of costly late-payment penalties, cuts down on time-consuming supplier inquiries, and opens the door to more opportunities to capture early-payment discounts.
- Competitive advantage. Electronic payments provide businesses with a decisive edge over other companies in their peer group. Forty-five percent of best-in-class accounts payable departments have established electronic payments as a standard means of conducting business with key suppliers, Aberdeen Group reports. What’s more, 48 percent of best-in-class accounts payable departments have integrated electronic payments with their ERP.
- Less risk. Paper checks remain the dominant payment method targeted by fraud, with 85 percent of affected companies reporting that their checks were targeted, per the Association for Financial Professionals (AFP). With the typical loss from payments fraud totaling $19,200 annually, businesses simply can’t afford to stick with the status quo when paying suppliers.
- Potential card rebates. Paying suppliers via cards is gaining popularity for the lucrative rebates that are provided by the issuer based on the card spend. These rebates can even help transform an accounts payable department from a cost center into a profit center.
- Improved compliance. Businesses are subject to ever-increasing regulations and rules that require strong internal controls. With electronic payments, businesses obtain complete audit trails. Compare that with paper checks, which are hard to control and easy to misplace.