In the contemporary business world, credit constraints have pushed businesses into researching on ways to use internal funds efficiently and reduce costs. Among the areas that firms are exploring for cost reduction opportunities are the account payables. Organizations have discovered that replacing traditional manual payment solutions with electronic payment solutions has enormous monetary and operational gains.
Regrettably, in spite of these vast benefits, many businesses still use manual payment systems that are both inefficient and costly. For example, processing a payment manually costs approximately 44% higher than processing it electronically.
Traditional Payment Systems and their Shortcomings
Currently, many businesses continue to use manual payment methods for their invoices. Paper-based payments are flawed and associated with much inefficiency, errors, huge expenses, and delayed payments. They are labor intensive, and accountants spend lots of effort and time handling paper invoices and chasing approvals.
Forward-looking organizations use electronic payment methods such as ACH, Wire Transfer, and Virtual Card that are not only fast but also secure. These payment methods integrate well with an organization’s existing system as well as enhance the efficiency of the AP department. Electronic payment solutions such as iPayables offers electronic payment methods that integrate with your existing accounting system to cut costs, increase efficiency, and deliver greater visibility and control.
Automated Clearing House (ACH) is a payment solution for small expenses that is low cost, secure, and reliable. It has features that enable fraud prevention and boost audits and controls. ACH payments improve account reconciliation and spend visibility. They are great alternatives for processing hundreds or thousands of checks. ACH lessens the resources used in the creation, mailing, and processing of checks such as fossil fuels, trees, and water.
Virtual card is a next generation payment solution for post-invoice payments. It is a safe solution as transactions take place through the phone, internet or mail order. It helps enterprises improve efficiency, attain greater integration and control, and increase flexibility. Virtual cards help companies remain competitive in an increasingly competitive business world. The good thing with virtual cards is that they are customizable to meet the unique needs of different businesses.
Finally, wire transfer is an electronic payment method whereby funds are transferred from one person or entity to another. It is fast, reliable, and safe. Organizations can use wire transfers to make immediate money transfers to suppliers and other parties easily and conveniently.
Benefits of Electronic Payment Methods
Organizations are implementing electronic payment solutions to reap their enormous benefits. Among the benefits include:
- Cost savings: Electronic payment systems reduce costs by eliminating paperwork, automating approval, and reducing transaction costs. They save enterprises hundreds or thousands of dollars in transaction costs. Also, companies do not incur late payment penalties and enjoy Dynamic Discounts from suppliers.
- Reduce inefficiency: AP professionals do not need to work on invoices and payments manually.
- Fast and secure: Electronic payments are fast, convenient and safe as compared to traditional payment methods. Organizations and suppliers don’t have to wait for checks to clear to access cash. With electronic payments, you don’t have to handle cash and its associated security risks.
- Establish healthy vendor relationships: Electronic payments improve the relationship between organizations and their suppliers because payments are made promptly and the two parties do not have to deal with tiresome paperwork.
- Prevent fraud and misuse: Electronic payments lessen cases of overpayment, duplicate payment, and fraud that have adverse effects on a company’s bottom line. They also limit the amount of physical cash employees handle and hence reduce fraudulent activities and misuse.
Fortunately, there are numerous compelling benefits for organizations to shift from manual payment methods to electronic payments. Electronic payments help firms unlock cost savings, attain operational efficiency to propel long-term growth, and manage cash strategically. They are also fast, safe, convenient, and secure. Don’t let your organization miss the financial and operational benefits of electronic payments. Implement them now!