There is no doubt that paying by check is a comfortable and familiar payment method for many business owners and operators, with 75% of organizations still using checks for outgoing payments, according to the 2024 Association of Financial Professionals (AFP) Payments Fraud and Control Survey Report.‡ However, this method is quickly becoming an outdated practice that increases fraud risk and costs more time and money than electronic payment methods .
As businesses fully embrace digital payments, they’ve unlocked some key strategies for perfecting payables. Well-designed payment systems can speed up cash flow cycles, reducing days sales outstanding (DSO) and keeping cash available for longer. Digital payments can also make the most out of employees’ time – overall, it increases operational efficiencies. secure and convenient, these integrated cloud-based payment networks help businesses reduce cost, earn rebates, boost efficiency and enhance security. There are several benefits of an efficient, payables program for your business to consider.
1. Automation and integration are game changers
Automating your payables through technology will reduce manual effort from your team and will consolidate payment processes to connect the dots from invoicing to cash-in-hand. Additionally, with a digital dashboard, you can access data-rich payables reporting, including outstanding and overdue payments, currency types, payables versus receivables, and reconciliations. Some platforms also offer automated reconciliation, further smoothing out some of the more friction-heavy aspects that can bog down a team.
Beyond the power of tech tools, integrated cloud payments can seamlessly work with your accounting system. Integrated cloud payment systems provide a single, simplified process across technology platforms, bank accounts and payment types. This includes a support team that will work with your IT department to make sure everything runs smoothly before your first payment. The solution should also work with all major enterprise resource planning (ERP) systems and databases, such as Oracle, JDE, Lawson, SAP, Microsoft Dynamics and others.
In addition, it’s important to know how many vendors are already accepting electronic payments through a provider’s network. The more advanced networks will accept payments from more than 600,000 businesses who are already established in their network. An integrated cloud payment network should ultimately improve your vendor relationships with a positive payables experience, optimize your team’s productivity by reducing manual tasks and simplify processing with a single payment file.
2. Lean into technology to ‘checkmate’ check and payables fraud
The 2024 AFP Payments Fraud and Control Survey reveals that 80% of organizations experienced payments fraud attacks or attempts in 2023, a 15-percentage point increase from the previous year, with checks remaining the most vulnerable payment method A secure electronic payment network will help reduce this risk dramatically, whether it’s integrated payables, Visa® Payables Automation or ACH. Mechanisms built into these payment networks and systems inherently help flag fraud, or incorrect and incomplete payment details. For instance, transaction review and approval workflows, positive pay (a check verification tool), ACH filters and blocks (automatic ACH rejection until transactions are approved), and more can all work in the background 24/7 to mitigate fraud.
When establishing a digital system, the first step is to ensure your company authenticates all your vendor information, including your company’s main point of contact for payments, bank account verification and electronic remittance delivery information. This will help you significantly reduce the risk of payment fraud that results from account takeover, intercepted payments, business email compromise and other fraudulent schemes. By having all of the information in the system, it’s simpler to catch critical changes or attempts to change payment information.
The cloud payment network should also require your vendors to provide their own corporate data that they in turn validate, verify and maintain. This ensures there is no need for your company to maintain or update sensitive vendor bank data.
3. Take advantage of financial incentives
We’ll keep this tip short and sweet: with certain payment systems, your business can be eligible to earn rebates. And, the more of your payables program you onboard to the system, the more payments can work for you toward those rebates and make your payments work for you. Check with your financial professional and bank to learn more about how your payments can earn rebates for you and your business.
4. More time for strategy, more efficiency, more cash flow optimization
The integration of cloud payments within your company allows your accounts payable team to spend more time concentrating on high-quality deliverables for customers, rather than manual maintenance of vendor bank details. Your accounts payable team has more time to focus on strategic priorities by utilizing the efficiency of digital payments that streamline payment automation. Cloud payments allow for your customers to receive information just how they like it, fast and hassle-free. The cloud payments also improve control over payment timing to help your business manage your cash float each month and increase efficiency with single payment files and electronic processing.
The bottom line on digital payment programs
If you move your payables to a digital payment system or network, you can increase automation and integration, reduce fraud, earn rebates, and spend more time moving your company forward
If you are interested in learning more about how UMB can help your business as a financial partner, visit our website.
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