Paper checks passé? We’re getting there. Fact: These days, companies are both sending and receiving nearly half of their payments electronically.
That’s according to the most recent Electronic Payments Survey out of the Association for Financial Professionals (AFP).
Not quite there yet? It’s understandable. There’s no shortage of obstacles to getting everyone on board with electronic payments, both internally and externally.
Still, considering the potential time and costs savings for companies of all sizes, it’s worth the effort to “electrify” as much of your A/P and A/R processes as possible.
Check out what the AFP found about how and when your peers are turning to e-pay and what remain the biggest obstacles to getting those percentages even higher.
Compare your stats to these
Key finding: Just because a company makes (or receives) nearly half of its payments electronically doesn’t mean that half its vendors (or customers) are impacted. Instead, organizations are targeting they key and highest-volume business partners for these improvements:
On the A/P side:
For payments to major suppliers, organizations make an average of:
- 49% of their payments by check
- 26% by ACH credit, and
- 17% by wire transfer.
But when it comes to their other, “non-major” vendors, checks remain the primary payment method for nearly two-thirds (64%) of an organizations’ payments.
On the A/R side:
- 47% of payments from major customers come as checks, while
- checks are the primary method of 71% payments received from “other” B-to-B customers.
However, what might be the most encouraging stat, especially if your e-pay stats aren’t quite there yet:
Half of companies are very likely to convert the majority of their B-to-B payments to major suppliers from checks to electronic payments in the next three years.
So there’s your route in.
Of course, if you are going to approach more suppliers about sending you more payments via ACH or wire transfer, it pays to know in advance the biggest objections you might encounter. The AFP survey can help you there, too.
At the present, the top four barriers to electronic payments are:
- It’s tough to convince suppliers to accept electronic payments
- Trading partners can’t send or receive automated remittance information with e- payments
- There’s no standard format for remittance information
- There’s a shortage of IT resources to implement e-pay
So work with the rest of Finance as well as your IT department and even your financial institution to have answers to these issues before you approach suppliers – or customers for that matter.
What successes have you had getting suppliers to accept or customers to make electronic payments? Share them here.