Riding the Electronic Payments Wave
As people across the country hit the beach this summer for surfing and other fun, accounts payable departments will be riding a wave of a different kind: the migration to electronic supplier payments.
Seventy percent of accounts payable departments have a strategy in place to increase the percentage of electronic payments they make to suppliers, the Institute of Finance and Management’s (IOFM) 2018 Future of Accounts Payable Survey finds. As a result, businesses predict that within the next three years, they will make more supplier payments via Automated Clearing House (ACH) than paper check, and that the percentage of supplier payments they make via card will more than double.
The growth of electronic supplier payments is no surprise when you consider that accounts payable departments of all sizes are looking for ways to reduce costs, ensure accurate payments, strengthen supplier relationships, deliver value to the organization, and extend Days Payable Outstanding (DPO) – a measure of the average length of time it takes for businesses to pay their supplier invoices.
Paying suppliers electronically meets all these objectives.
Strategies for improving electronic payments adoption
But electronic payments success is not assured without proper planning.
Here are eight strategies for ensuring that your electronic payments aren’t a wipe out:
- Work with key stakeholders such a treasury and procurement to define organizational goals.
- Look for an electronic payments solution that works with your enterprise resource planning (ERP) platform, so you can have streamlined payment file processing that leverages your organization’s existing standards, and real-time visibility into the status of all payments.
- Ensure that your electronic payments program supports multiple payment methods — including ACH, virtual card and even paper check – to support the needs of all suppliers while achieving operational efficiencies and cash-back rebates from electronic payments.
- To drive electronic payments adoption, make sure your electronic payments solution provides suppliers with standard electronic remittance information across various payment methods.
- Be sure the payments solution provides you with all data necessary for reconciliation.
- Focus your electronic payments adoption efforts by having your solutions provider review your vendor database to identify businesses that accept virtual card and ACH payments.
- Develop a plan for notifying your suppliers that you can now pay them electronically. Be sure that all communications to suppliers appropriately reflect your organization’s brand.
- Use program management status and reporting to trade progress and identify adjustments.
Following these strategies will help your organization ride the electronic payments wave.
Want more help developing your electronic payments strategy? Contact an expert to learn more.