In research sponsored by Truist,1 two-thirds of businesses reported that they use checks to pay vendors, but the majority of those companies indicated they plan to convert their payables to electronic forms of payment.
Shifting to electronic payment has many advantages, including financial accuracy, faster settlement speed, and fraud prevention. It's also the best way to ensure you have money to fund your business.
With ACH, credit cards, or wire transfers, you can make just-in-time payments and keep cash in your business longer. Encouraging your customers to also pay electronically and making it easy for them to do so will allow funds to hit your bank account sooner.
Using electronic payments for payables and receivables can help your company save time and money on processing and paperwork. Electronic payments also offer more control over employee spending and eliminate the need to track down missing checks.
The number-one obstacle for businesses looking to implement electronic payments is customers and vendors who haven’t made the transition yet.1 Yet as more companies view electronic payments as the key to healthy cash flow and success, they’ll become the standard means of payment.
Considering electronic payments?
What benefits could digital payments offer your business? Consider:
- Hold on to cash longer – Improve your cash flow cycle by implementing precisely timed payments. Real-time payments help you plan and map out when vendors are paid so you can keep cash in your business longer or take advantage of early payment discounts.
- Minimize working capital – With better visibility into your payments and collections, you can make smarter financial decisions and spend your cash where you need it most.
- Reduce financial processing and direct labor costs – From invoicing to disbursement, electronic payments are simpler and require less processing time, especially when set up with automatic reconciliation.
- Control employee spending – Credit or purchasing cards offer transparency and provide you with a better understanding of your company’s expenses. Remember, limiting employee spending is an easy way to improve your cash flow.
- Pay employees faster – Using direct deposit to pay your employees is a simple way to reduce the need for checks.
- Prevent fraud – Eighty-one percent of businesses are impacted by fraud and nearly 75% of those attacks involve checks.2 Electronic payments help you identify and address fraud quickly.
Payment strategy is the core of your operating and cash flow cycles. Whether squeezing your balance sheet to fund growth, controlling your financial and administrative costs, or protecting your business from fraud, start by transitioning to electronic forms of payment.
Financial and capital efficiency, along with improved cash management through electronic payments, can help increase your company’s value.