It’s no secret that accounts payable teams are faced with a variety of challenges stemming from technological advances, multiple payment options, and pressure to reduce costs. Even more so in today’s business climate, where accounts payable teams face the complexities of working remotely, maintaining departmental efficiency, making sure all payments are made and received on time, and ensuring that payments are protected and safe.
So, how does it get easier? Technology advancements are presenting teams with more ways to pay, but there are still many uncertainties. Turns out, the question most often being asked by many AP professionals is: “What’s the best way to pay?” To help, let’s explore the different payment options available.
For more information on this topic, make sure to join us for the webinar “A Modern and Simple Approach to Check Processing: Until Checks Do Us Part” by Liz Scott on November 17, 2020 12:00 p.m. EST / 9:00 a.m. PST. REGISTER HERE.
Paper Checks
Aside from coins and currency, paper checks are the oldest payment method available to accounts payable departments (dating all the way back to the 17th Century – wow!). While the check payment process of the past was at times inefficient, from the gathering of signature approvals before printing, to the risk of checks getting lost or compromised – it’s important to note that more than 50% of business payments are still made by check today.
Why are paper checks still the go-to choice for so many businesses?
- Familiarity - paper checks offer a tried and trusted workflow process
- Budget – The average cost to cut a check is around $4 up to $6 on average. You can reduce this cost by 50% using an application to print on blank check stock.
- Protection - Positive Pay plus additional security features within check stock and check printing software including Security Font, Microprint, Void Pantograph, Toner Grip, Security field, and much more to fortify Check payments from fraud.
Checks still matter
A report from the Association for Financial Professionals titled, “Not Going Anywhere: Why Checks Still Matter” further illustrates why checks remain so popular with a wide range of businesses. Thanks to technology and today’s business environment that finds many people working remotely with less face-to-face contact between accountants and their clients, new technological breakthroughs have made the traditional check process faster than it’s ever been.
Modernized check payments now have the same advantages of the tried and trusted approval processes and cash flow management, combined with the paper-free benefits of electronic payments. Therefore, there’s no reason to reinvent the wheel…it’s been improved!
There are plenty of reasons why the ‘modernized check’ is worthwhile, here are a few of them:
Mobile applications that let businesses view all payment data and bills, schedule payments, and there are some that even collect check signatures right from our phones.
Automated printing and mailing services that eliminate the hassles of the printing process and reduce the time spent folding and sealing the check envelopes.
Personalized and customized checks that include added levels of security and maintain brand recognition.
Automated workflows and user roles that allow accounts payable teams the ability to assign specific user roles and approvers per each account or payment.
Rising Star: Electronic payments
An electronic payment – echeck or ACH – is simply an electronic form of a paper check. Just like a paper check, electronic payment methods draw money directly from a checking account. Many businesses are drawn to electronic payments because of their simple and convenient process.
Why electronic payments are gaining popularity
While paper checks continue to dominate all other payment methods for businesses, electronic payments can help your company:
- Cut costs
- Save time
- Reduce paper usage
- Increase efficiency
However, electronic payments do have their uncertainties and drawbacks. Let’s take a look at a few:
ACH requires prefunding. That means your cash is tied-up for as long as 3-4 days before payments are actually due.
Strict cut off times. There is close to zero wiggle room for ACH transactions and after a certain amount of time, your payments won’t begin processing until the next day.
Similarly, if the payee’s bank information is not collected and verified your payments are converted to paper checks and processed 7 days later.
ACH is experiencing increasing rates of fraud with many cybercriminals attacking businesses payment data directly via email or text message.
While comparing these two payment methods, there are a lot of aspects to consider such as time, convenience, security, and costs. If you’re interested in learning more about the payment method suited for your business’ accounts payable processes, RSVP to the upcoming webinar “A Modern and Simple Approach to Check Processing: Until Checks Do Us Part” by Liz Scott on November 17, 2020 12:00 p.m. EST / 9:00 a.m. PST. REGISTER HERE.