It is a truth universally acknowledged, that a CFO in possession of a good finance department must be in want of an efficient payments operation. This is particularly true as more companies move into global operations with suppliers all over the world, and as the CFO increasingly becomes a stepping stone for executives looking to take the helm of their companies some day.
As a result of this cultural shift, CFOs have taken on more and more visible roles in front of external stakeholders. Because of this newfound centrality of the financial operations, it’s ever-more incumbent on the finance team to become a profit center as opposed to a cost center.
This importance is why Ardent Partners will imminently publish our “ePayments Rising: The 2014 Market Report.” In it, we’ll detail the current state of B2B electronic payments, how ePayments can help financial organizations move to the “next level” of performance, and what lower-performing organizations can do in order to move their AP operations into a higher tier of success.
So, in advance of that publication, here are three things you may not know about ePayments (and one thing you should):
1. The Biggest Barrier isn’t What You Think
Say the word “ePayments,” and some older AP professionals may break out in hives. It’s understandable–this is a back-office group where many processes were developed in the 1950s and haven’t really changed since then. But there’s a new era coming with the increasing proliferation of electronic payment methods, which, at least on the buyer side, are becoming easier and easier to work with.
So technology adoption isn’t really an issue, at least on the buyer side of the equation. That leaves one side of the ePayments equation: the suppliers. And indeed the biggest barrier to ePayments adoption lies squarely in the supplier camp. That barrier, incidentally, is the costs borne by the supplier for an ePayments implementation. What are the costs? Well, you’re going to need to check out the report to find out. (You didn’t expect me to give the store away now, did you?)
2. The Biggest Challenge is Approvals
Specifically, it’s the time approvals take that causes the most consternation for AP departments. The average organization takes a little over 12 days to process a single invoice, at a cost of roughly $14 per invoice. Think about this: it takes the average AP team 12 days–more than two work weeks–to get a single invoiced approved and payment out the door. That’s an incredibly long time in our lightning-speed business world.
That’s not the only challenge facing the modern AP professional, however. To find out more, take a look at our ePayments Rising report (due to publish soon).
3. ePayments are Actually Pretty Common
In the B2B arena, fully 58.1% of all payments were electronic last year. Slightly over half of all suppliers–50.5% also accepted ePayments last year. This includes payment methods like ACH, wire transfers, business networks, and commercial cards to name a few. Paper checks are costly, prone to fraud, and it’s possible to simply lose them. Because of these perils, it’s no small wonder that ePayments have grown in prominence.
And now for that one thing you should already know …
ePayments are Cheaper than Paper
A robust ePayments operation can capture a multitude of cost savings for your organization, including early payment discounts and more streamlined processing. The quicker you process a payment, the quicker you get some money back and the quicker you move onto the next thing.
Still don’t believe me about these awesome things called ePayments? Take a look through our “ePayments Rising: The 2014 Market Report,” due out soon at a website near you.
