Electronic payments, or ePayments, are payments that are made directly from your bank accounts using a secure internet connection to process the transactions.
We recently surveyed our customer base to get their feedback on ePayments and how they fit into their current accounts payable process. We gathered data from 120 respondents whose titles included: AP manager, controller, chief financial officer, finance executive, accounting director, and accountant.
Then we invited our partner, AvidXchange, to write this guest post about the current state of payments in 2016:
The State of Payments 2016
According to industry statistics from The Association of Financial Professionals, 50% of companies were still using paper checks as of 2013.
According to our survey, about 47% of our customers are using electronic payments in some form or fashion. This means that the other 53% are still doing things the old-fashioned way.
There are always underlying reasons why people are resistant to change. In today’s post, we’ll take a closer look at the survey results and identify three major themes from respondents.
1. “The Current Process Works”
When asked, “Has your organization considered implementing an electronic solution for payments?” 22.5 percent of respondents said they plan to evaluate ePayments in the future. 19.17 percent said they haven’t evaluated electronic payment solutions. To that small group, we asked a follow-up question: “Why?” One of the most common responses we saw was, “Our current process works.”
If your company is still making payments with paper checks, you’re not capitalizing on today’s best practices. By adopting ePayments and automating your AP process, you can pay vendors electronically while maintaining all of your banking relationships and approval workflows.
You continue to make payments in your accounting system like you do today, but you never have to print, sign, stuff, or mail printed checks again. AP Automation doesn’t change your process, it streamlines it!
2. “Management Prefers Paper”
Another response we heard? “Management prefers to use paper checks.” Why? The misconception of added control and security:
“We send payments electronically internationally, however, locally we prefer the added security of having checks signed.”
In a paper-based environment, documents are constantly at risk. Physical copies of sensitive information can be easily misplaced, altered, or destroyed. If these documents are lost or tampered with, you no longer have access to the data necessary to effectively operate your business.
Research has shown that paper documents and checks are leading sources for fraud because data is not protected. In fact, 48 percent of payment fraud can be tracked back to paper checks. And according to a recent survey by the Association of Certified Fraud Examiners (ACFE), nearly 70 percent of corporate respondents have been victims of check fraud.
Payment automation enforces strict adherence to business rules, reducing opportunities to commit fraud. Manual methods rely on post-payment review to detect deviations from business rules. By the time you’ve detected an issue or discovered an error, the fraud has already occurred.
Automation gives you visibility into your bill payment process by digitalizing all invoices and payments, whereas with paper checks a payment could get lost in the mail, take longer to arrive at the vendor than expected, or sent to the wrong address. In an automated system, you know when invoices come in, which balances are outstanding, when payments are due and who hasn’t approved invoices and payments.
3. “Time and Resources”
“We’ve considered electronic payment solutions, but have not had the time or resources to do it.”
According to a recent CFO article, APQC (American Productivity and Quality Center) surveyed finance leaders about how much time their organizations spend on transaction processing, control, decision support, and management activities.
The results? In an average work week, finance staffs are spending the equivalent of Monday morning through lunchtime on Wednesday making sure that bills get paid, customers receive accurate invoices, general accounting work gets done, and fixed assets are accounted for, among many other tasks that keep money moving through an organization.
AP automation reduces invoice approval time from an average of 28 days to 2.7 days. No more opening and sorting invoices, manual data entry, or waiting for interoffice mail or overnight courier for approvals. ePayments eliminate costs associated to lost checks, allows payments to be received faster by eliminating mailing time, and lowers check processing costs related to manual tasks.
Save Time and Money with Payment Automation
The monetary savings gained through AP automation is one of the main reasons people automate in the first place. Think of it this way: The longer you wait, the less you save in the long run.