At long last, real estate companies appear ready to quit writing paper checks to suppliers.
The Institute of Financial Operations (IFO) reports that one-third of companies have defined a strategy to migrate to electronic business-to-business payments, and are executing their plan.
Within three years, three-quarters of companies expect to make most of their business-to-business payments electronically, per IFO.
In fact, an eye-popping 92 percent of businesses surveyed by the Remittance Coalition expressed a high (47 percent) or moderate (45 percent) level of interest in using more electronic payments.
Only 17 percent of companies surveyed by IFO have no plans to migrate to electronic payments.
Change is already afoot in how businesses pay suppliers. IFO’s AP Automation Study found that the percentage of business-to-business payments made by check is declining annually by double-digits. What’s more, 75.3 percent of all companies – and a whopping 85.7 percent of large businesses – are making fewer business-to-business payments using paper checks compared to four years ago.
Checks now represent only 43 percent of payments made to major suppliers, the Association for Financial Professionals (AFP) reports.
The use of ACH, in particular, has grown tremendously for business-to-business payments. And Virtual Cards are growing faster than any other payment method for B2B transactions.
Together, these data points suggest that electronic payments have reached the tipping point. If businesses don’t have a strategy in place to pay more of their suppliers electronically, they risk falling behind their peers in terms of operational costs, staff productivity, supplier relationships, and fraud risk.