Today’s business environment is forcing companies to be more innovative and to find the most cost-effective ways to run the business. Of course, financial executives must be good stewards of the financial resources of the company. They also need to ensure that financial operations take advantage of innovation, often in the form of technology, to improve the company’s competitive edge. In today’s digital environment, electronic payments have become a top priority for both C-suite executives and AP staff alike.
Using Electronic Payments to Improve Your Bottom Line
There are more ways that electronic payments can improve your bottom line than you might think. When you migrate AP operations away from manual supplier check processing to electronic payments, you’ll experience benefits in a number of areas that will have a positive impact on your bottom line.
1. Cost Reduction
Industry researchers estimate the cost of issuing a paper check to be in a range of $3 -$10, depending on what hard and hidden costs are considered. These costs may include items like check stock, printing, envelopes and postage, along with processing time and resources used. In comparison, the cost of processing electronic payments is only a small fraction of that amount.
In addition, security is always an issue in the payment process. The increased security controls available with electronic payments help reduce the costs of fraud, theft and lost checks. Companies also see a reduction in duplicate payments that drain cash resources and require manual intervention.
2. Time Savings
Personnel costs are always the largest contributor to the cost of any business operation, and accounts payable is no exception. Processing payments via paper checks is a highly labor-intensive process. When you move to electronic payments, you eliminate the time devoted to monitoring the check printing process and manually preparing checks for mailing.
3. New Ways to Save
Electronic payments are extremely fast and can put your company on a preferred status with your key vendors. As a “preferred” customer, vendors will often offer you better pricing and early payment discounts. Many companies that use electronic payments are pleasantly surprised to find that those two perks actually represent a healthy new revenue stream.
In addition, companies that use virtual cards may qualify to receive monthly rebate revenue. Just think about this new revenue stream as a percent of the accounts payable dollars you pay.
Some Companies Delay Transitioning to ePayments
Some companies delay automating B2B payments based on legitimate concerns. The good news is that those concerns do have solutions.
For example, some companies are worried about how their vendors will react. Companies that have made the transition find that a well-planned process for bringing vendors on board with new systems can turn vendors into enthusiastic supporters.
Security is another legitimate concern. However, the fact is that today’s technology does a much better job of providing security than the manual processes currently in use. Additional controls are also available for payment vehicles such as virtual cards, where the company can set purchase limits and restrict the card to a single use.
Transitioning to electronic payments makes sense for companies of all sizes and in all industries. The opportunity to structure accounts payable operations to contribute to the bottom line is just too good to pass up. In addition, you’ll reduce the amount of manual processing your staff performs and can reassign those resources to projects that will add even more value to the business as a whole.
The experts at ACOM can make sure that your transition is a successful one. Call us at 800-699-5758 or fill out our online contact form.