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For about a decade, the analysts at Ardent Partners have been researching and benchmarking technologies, processes and performance within accounts payable including electronic or B2B payments. This is an area that has seen significant innovation in the last few years and it is clear that it is an area that will continue to see significant change. Now, it is true that the volume of checks currently being used in the US is still very high, however, our research over the last couple of years has shown a nice uptick in the usage of electronic payments (including ACH, card and wire).
AP is increasingly under pressure to become a more strategic component of the enterprise’s financial operations and to do so, it must be better positioned to impact and support working capital optimization strategies and it must be able to attain visibility so that it can better understand and share expected liabilities with treasury or finance leaders.
To become more strategic, an AP operation must experience a transformation similar to those that have already occurred withing many procurement organizations. An AP transformatuon has many facets, but technology is one critical element. And, when it comes to B2B payments, if an AP group is looking to be more strategic and add more value as a business function, the migration away from checks towards electronic forms of payment is a necessity. Some providers to consider when automating or moving to electronic payments – NVoicePay, Paymode-X, and US Bank with offerings available today and two that are expected to later this year Ariba (with Discover) and Basware (with Mastercard).
Here are key stats that AP/Finance leaders should know if they’re considering (or not considering) moving more check payments to electronic forms of payment.
- 53% of AP/Finance leaders noted that the top barrier to increasing electronic payments is difficulty in convincing suppliers to accept ePayments – Tweet This!
- 70% of AP/Finance leaders report ‘cost savings’ as the top benefit to paying suppliers electronically – Tweet This!
- 90% of AP/Finance leader report that suppliers are more favorable to ACH payment today than they were three years ago – Tweet This!
Some of the reasons why ePayments are worth investigating:
- Lower processing costs and increased efficiency – The cost to process any form of ePayment whether wire transfer, ACH, or card is significantly less than a check (Remember, if you take this survey, you’ll get fresh data on this and other topics). Additionally, the speed in which electronic payments can be processed presents greater opportunities to take advantage of early payment discounts that may not be accessible with the more lengthy process of a check payment.
- Higher level of accuracy – ePayments offer a much higher level of accuracy as to the actual dollar amounts being paid, thereby reducing the number of late payments, overpayments, duplicate payments, errors and discrepancies.
- Improved visibility for all stakeholders – Automation introduces a much higher level of visibility into the AP process, and into the payment process specifically. ePayments provide much more detail as to the status of the payment (if it has been scheduled, when it will be made, etc.), better capabilities around reporting, and improved access to vital payment data.
- Better cash management – With ePayments the data that can be gathered, analyzed and shared improves an organization’s visibility into cash positions. This valuable information can enable more accurate forecasts of cash flows and can improve an enterprise’s ability to implement more sophisticated cash management strategies. With the right information, treasury can be more flexible in making decisions to pay invoices early, take more discounts, or extend payment terms by utilizing third-party financing instruments (e.g., supply chain finance), which results in the most optimal use of working capital.
