What do you get when you write a check?
Paper to be signed and efforts redoubled.
That’s what you get for all your trouble.
I’ll never write a check again.
Ok, maybe Dionne Warwick’s version of the song works a bit better – but you get the drift. Printing, signing, stuffing, stamping, and mailing paper checks is inefficient, costly, and completely unnecessary.
If your organization is still singing the same old song, it’s time to pick up a new tune with an electronic payment solution. How big is the paper check problem, and how do electronic payment solutions solve the problem?
How Big Is the Paper Check Problem?
Most companies don’t realize just how much time and money they waste in their traditional AP workflows. Studies have shown it can cost companies $20 or more per check to pay vendors, and that AP teams spend more than 80% of their time on manual transactions and payment processing.
According to the Federal Reserve Payments Report of 2018, more than 15 billion paper checks were sent within the US. Using 2018’s rate of 50 cents a stamp, that was seven-and-a-half billion dollars in postage spent (we’d argue wasted).
Electronic Payments Are the Solution
Electronic payment applications speed and automate payments to your organization’s vendors. While all require some initial setup, once that’s complete, electronic payments can become an integrated part of your payables workflow. Most electronic payment applications allow you to pay vendors electronically through a variety of channels, including:
- Reliable ACH Transfers
Most of us are familiar with an ACH transfer, and that’s one way in which electronic payment solutions can operate. Funds are sent directly to your vendors’ bank accounts with no action required on their part and usually arrive in 3-4 business days. Digital check options include ways to expedite the delivery time and companies can leverage these solutions to offer vendors a better experience.
- Rapid RTP Transfers
A new option is the RTP network also provided by The Clearing House. Unlike ACH, though, RTP is a real-time payments platform that allows recipients to receive funds directly into their bank account in less than 60 seconds.
- Email a Digital Check
Yes, you read that correctly. Many payment platforms can deliver a printable check by email, combining the efficiency of digital communication with the familiarity of a paper check. The recipient simply prints the check and processes it normally.
- Payment Cards
Operating like a gift card, virtual payment cards are tied to your bank account and can be used by the recipient anywhere traditional card payments are accepted.
- Check Is in the Mail
Payment platforms can print and mail paper checks when necessary.
An All-Around Win
Electronic payments are convenient and labor-saving for you — and they’re also of benefit to your suppliers. It’s costly and time-consuming for your vendors to open and process paper checks, so sending them electronic payments you can eliminate manual processing on their end. If your vendors are using a modern accounting application, like Sage Intacct, that integrates with their financial institution, the electronic payment notifications flow right from the bank into the accounting software saving them additional time and effort.
Integration Is Key
Automating your organization’s payment processing tasks yields significant benefits. To maximize the benefits, you’ll want to select an application that integrates with your accounting solution. By having them integrated, the payment processing workflow is wholly contained, providing a secure, convenient, and reliable way to make and track payments. This also increases accuracy and saves staff time, with only having one point of data entry but information available across all systems.
Our clients have had great success with a two such solutions, Checkbook and Vendor Payment Services Powered by CSI. Additionally, full-blown AP Automation applications like Stampli usually include electronic payment capabilities. Sage is entering the payment processing area too, with its Vendor Payment Services (we realize it’s a very similar name but it’s actually a different product from Vendor Payment Services Powered by CSI). Your choice will depend on many factors, and a solutions partner, like BT Partners, can help you evaluate and select the best solution for your needs.